Retail Development Bill [HL]

Lord Cotter: My Lords, I beg to move that this Bill be now read a second time.
	Are we to wait to see our communities, our villages and our local neighbourhoods wither and die or can something be done about it? I do not think it is overstating the case to say that we are in danger of losing the heart and soul of this nation—a fact drawn attention to by reports produced in the past few years on Clone Town Britain and Ghost Town Britain.
	Parts of the United States very much deserve the title "ghost town". Where the US goes, do we follow? Noble Lords may like to know that there is a very interesting book on the US experience called Big-box Swindle: The True Cost of Mega-retailers and the Fight for America's Independent Businesses by Stacy Mitchell. We can, through inertia, stand by and see the erosion of choice, diversity and, yes, competition. I refer of course to the decline in our small shops.
	In the other place on 8 February 2005, I introduced a similar Bill—the Small Shops (Protection) Bill. We are three years on and the issue is still to be tackled. In the mean time, many thousands of businesses have gone to the wall. That is why I am presenting this Bill today. Its title is the Retail Development Bill but it is really all about communities, neighbourhoods and what people need. I and others will increasingly argue that we need to keep our local shops and that they are the backbone of the local community. The Bill aims to protect the future of small independent retailers and to ensure that the local community has a real voice in the retail development of an area.
	Therefore, a key aspect of the Bill is the creation of retail development plans by the local authority, specific to each part of the country, taking into account local wishes and ensuring choice, diversity and convenience for local people and ensuring also that retail developments suit the character of an area. This should prevent the over-expansion of supermarkets where they are not needed or wanted and allow the local community to become involved in the future development of an area. When a supermarket has applied for planning permission, an impact assessment should be carried out to analyse the impact on the local community's services.
	In this connection, there is a need to assess the effect on the economic aspect of the local community. It is said that £10 spent in small shops is worth £25 to the local economy, compared with just £14 for supermarkets. In addition, 59 per cent of turnover from local retailers is returned to the local economy, compared with just 5 per cent from the large retailers. The New Economics Foundation has strong views and evidence on this. Indeed, it is also not true to say that supermarkets create jobs; in fact, small shops create many more. Therefore, emphasis is placed in the Bill on assistance being granted to initiatives taken by local people where, especially in villages, the local shop is forced to close. Local residents who want to form a co-operative to keep the business going, or who want to do so by other means, should receive advice and help. Another aspect of the Bill is an overseeing regulator to ensure that these plans are formulated and carried forward, and the Bill also allows for such a regulator to investigate any restrictive land covenants or land banks.
	For many years now, there has been great concern over the business rates bill that small shops have to face, meaning that they pay a disproportionate amount. It is suggested that small shops can pay anything from 15 to 30 per cent or more of their turnover to meet the business rate cost, whereas it is said that supermarkets pay only 4 or 5 per cent. For the first time through this Bill, there will be the creation of three classes of shops. It will then be possible to examine this situation, and the Bill calls for a business rates review. Effectively, small shops will be class 1 and supermarkets class 3. The review will take into account how rates impact on the profitability of a business and its ability to support its owners and employees and whether the burden is disproportionate. Without anticipating a review, it seems fairly clear that at the moment it is disproportionate.
	There are many other concerns, such as frequently expressed views on the unfair pressure placed on suppliers and farmers by the big four. Much has come out recently on that, and much work has been done by Friends of the Earth, producer groups, trade associations and many others. So there is a great deal of support for the Bill. The Federation of Small Businesses, the FSB, says that it supports the Bill because of the strong message that it sends to the Government. The Forum of Private Business, the FPB, said in support of the Bill that,
	"this is a fantastic opportunity for the Government to lessen the impact that business rates have on small shops".
	We have an urgent situation which needs addressing. It is estimated that 2,000 local shops are going out of business every year, while the grocery market is being saturated by the big four supermarkets. They dominate 75 per cent of the market. A recent survey by the Association of Convenience Stores found that 69 per cent of people supported the idea of the local community becoming more involved with local planning decisions, a key ingredient of this Bill.
	In this day and age, with crucial concerns about the impact of activity on the environment, it is relevant to question the distance that food travels to reach the public. That has been talked about elsewhere and is very relevant to our concerns. Whether food needs to travel the distance that it does and the impact on the environment of that needs to be looked into. A similar recent statistic indicates that the average person now travels 893 miles per year to shop for their food. Those are all relevant aspects of shopping today.
	We have a great need for these issues to be addressed. In that connection, I shall refer to the fact that we have just had a preliminary report and recommendations from the Competition Commission, regrettably concentrating on competition between supermarkets—the big four—which is an issue, but they are still neglecting the small shops sector. A recent report produced by the FSB draws attention to the fact that France is the best example in Europe of getting the balance right between small shops and large retailers, with a balance of planning laws that allows fair competition and healthy communities. I would recommend those interested to study the detail and I hope that the Minister and the Government will want to study it also.
	I speak briefly to the Bill because the case is there. There is much evidence, published in papers and elsewhere, and I know that many colleagues will have things to say. It is undeniable that we need to address the issue of small shops and communities. I think all would agree that there is an issue of great concern here. I am sure that other noble Lords will add their experiences to what I have said. I thank the Minister for attending today and I hope that the Government will take the matter seriously. It is easy to sidestep, but if firm policies are not followed, inertia will rule and we will see a continuing decline in our local shops at great cost to our communities. I commend the Bill to the House.
	Moved, That the Bill be now read a second time.—(Lord Cotter.)

The Earl of Glasgow: My Lords, I thank my noble friend Lord Cotter for introducing this extremely important Bill and giving us the opportunity to take part in this debate. I support the Bill because I believe it is very important that small retailers and shopkeepers are given a fair chance to flourish. At present, most of them struggle to survive. In our rural market towns and among the vast sprawl of suburbia surrounding the larger cities, local shops are not just a convenience for local people but an important part of the community's social life. Yet the corner shop, the newsagent, the butcher, the baker, the greengrocer, the chemist and the haberdasher are all under serious threat. As my noble friend has already said, about 2,000 of them go out of business every year. In most cases, the reason is that they cannot compete with the supermarket or the powerful chain store that has opened up in the neighbourhood.
	We all tend to be a little ambivalent towards supermarkets. A recent poll showed that 70 per cent of us dislike them and yet nearly all of us use them. Why? Because on the whole the food is cheaper there and, like cars, they are extraordinarily convenient. All our shopping can be completed in 20 minutes instead of two hours going up and down the high street, doing what Margaret Thatcher used to call "shopping around", and there is also the relief of not having to worry about parking.
	As supermarkets provide 80 per cent of our food at very reasonable prices—that percentage is still rising—it is not surprising that so many small food retailers find it almost impossible to compete. But, why, we must ask ourselves, should we care if these small shopkeepers go out of business? Perhaps we should face the inevitable and move with the times. It is not because we mind, necessarily, about any individual shopkeeper going under, but because the small retail shop, by its very existence, provides an essential service to the local community. It is the retail outlet for dozens of other small local businesses: farmers, market gardeners, beekeepers, local potters and other craftsmen, even electricians, plumbers and signwriters, who rely to a large extent on the local shops for their livelihood. Local shops are the most important links in the chain that enables a local community to survive and thrive. If a local shop dies, the livelihood of so many small local suppliers will die with it.
	By contrast, supermarkets and chain stores have their own suppliers that can be hundreds of miles away and their produce arrives in vast lorries that can barely negotiate the narrow streets of some of our market towns. Also, in many cases supermarkets do not even employ local people to work in their stores. Perhaps the most important contribution that small local shops make is that they enrich the quality of life in the community that they inhabit. Local shops are personal and more human places. People know each other, people chat there and they keep each other aware of the well-being of members of the community. Okay, they gossip, but they also get to know that Mrs Jones, or whoever, is unwell, and make certain that someone goes around to see that she is all right. Small shops are an integral part of small communities. Supermarkets are not. In fact, there is nothing more irritating than the checkout girl chatting to her friend and holding you up in the queue.
	However, the Bill as I see it is not anti-supermarket. It is trying to ensure that supermarkets do not do serious damage to local traders in future and that their empire-building is more rigorously controlled. In the centre of towns, they can be a boon to small businesses. They can provide free parking to locals who will shop there, but also visit other shops in the high street. Sometimes, when fruit and vegetables come into season, for example, the local greengrocer can produce fresher fruit and vegetables at a cheaper price than the supermarket, whose produce is still coming from Spain or somewhere.
	However, those supermarkets situated out of town inevitably drain the lifeblood of local shopkeepers in smaller towns within 20 miles of them. The local shops in nearby towns tend to lose business and close down. Their premises in the high street are taken up by the chain stores and a once-pretty market town begins to lose its character. Its high street begins to resemble that of hundreds of other towns: the same chain stores, the same coffee houses, the same fast-food eating places and the same brand names on the shop fronts. So many of our once-distinctive country towns have already been transformed into these clone towns, not unlike those in the United States. We must hurry to ensure that they do not all go that way.
	Worst of all are the great out-of-town shopping centres, which not only are made up of supermarkets and chain stores but also provide entertainment and sporting facilities. There is one monster outside Glasgow on the M8, called Braehead. It is close to my idea of hell, yet people flock to it from miles around and I can only conclude that it is a popular success. Three or four specially scheduled coach-loads of shoppers leave for Braehead every day from my home town of Largs, nearly 30 miles away. Parts of the city of Paisley, an old cathedral town lying only four miles away—already depressed after the demise of its once-famous cloth-manufacturing industries—are now beginning to look like a ghost town. Do not, for goodness' sake, take the M8 past Braehead between 4.30 and 6 pm, because the volume of traffic leaving Braehead at that time causes ghastly congestion and, usually, a 10 to 20-minute tailback on the motorway.
	The trouble with supermarkets is that they do not care about the damage they do to local communities and will actively try to put a successful local trader out of business. Of course, their main competitors are their rival supermarkets, but this healthy competition hardly benefits the small shopkeeper. The trouble is that, despite internal competition with each other, they have all become too powerful. In several cases, when local authorities stand up to them and refuse planning permission, they take the local authority to appeal and, as in the cases of Ruthin in north Wales, Talbot Green in south Wales and Huntly in Scotland, Asda and Tesco won their appeals and the supermarkets went ahead against the wishes of the council and the local community. The Federation of Small Businesses—which, incidentally, supports the Bill—is now talking about "Tescopolies" and "Tesco towns", in which one supermarket company has double the market of its nearest rival.
	We all have reservations about establishing yet another regulatory body and all the bureaucracy that goes with it. However, if we want at least some of our small shopkeepers to survive against this ruthless competition, we need a regulatory body with teeth and enough power to stand up to these powerful supermarket chains: in this case, the proposed Office for Retail Planning. This will not mean that there will be no more supermarkets, although I hope that there will be a ban on more large supermarkets outside towns. Like David Cameron until he lost his nerve, I think that existing out-of-town supermarkets should be made to make their customers pay a parking fee. We need the Office for Retail Planning to make certain that future supermarkets are sited inside towns and never in places where they are likely to do irreparable damage to small, local communities.

Lord Cope of Berkeley: My Lords, the underlying aims of the noble Lord, Lord Cotter, in introducing this Bill as he explained it to the House just now and as supported by the noble Earl, Lord Glasgow, are admirable and I support them. Indeed, I have supported the preservation and encouragement of small businesses all my political life.
	However, I have been reading the Bill, and I am afraid that I must tell the noble Lord, Lord Cotter, that I do not think that the actual methods it proposes to help small businesses stand up to scrutiny. They leave a lot to be desired. To begin with, I would not like even one more semi-government body to nanny and bully us all. I do not like local authorities being given ever more orders from the Government and their agencies. The Bill provides for the new agency to bully and overrule local authorities. The Secretary of State can already do that, as I shall say in a moment.
	There are also far too many order-making powers in Bills these days about matters which are important to the working of legislation; this Bill is simply littered with them. Those drafting government Bills too often leave difficult matters to be dealt with in regulations and the noble Lord, Lord Cotter, has followed their bad example. There are at least 10 new order-making powers, one of which has 11 objectives, sprinkled throughout the Bill. The Bill tries first to define small, medium and large retail businesses. It does not actually define "retail", but I take it that that means businesses selling goods and services to the general public rather than others in their trade. That leaves antique shops in a grey area, because they do a lot of the latter. Nor is there any definition of small, medium and large retail premises, which are to be singled out for different treatment.
	Part of the definition is to be how many square metres of "retail sales floor" a shop has. Now, I know what the noble Lord means by "retail sales floor", but a legal definition is not so easy. Is it where the customers go? In that case, is the area behind the counter part of the retail shop? It is certainly part of the display area in many cases, with the cigarette shelves and that sort of thing, so presumably it is. What about the stock room behind it? That is presumably not part of the retail sales area, although it is, incidentally, included in the definition of small shops for Sunday trading. In a café, the obvious bit of the retail sales floor is the counter for takeaway sales, but it probably also includes the bit where people sit to eat the meals they have bought. If it can include somewhere where customers sit down, what about a solicitor? Is the room where he sees his clients part of a retail sales floor for this purpose? Presumably the reception area is as well. Service businesses often have no retail sales floor at all. A plumber does not have a retail sales floor, because he goes out and does the plumbing in people's houses and other premises. All this is to be left to regulations. It will not be clear to anyone who looks at the Bill what is or is not included.
	The other half of the definition is to be based on annual turnover. Turnover is a valid method of comparing the respective sizes of two similar businesses, but not of dissimilar businesses. The relationship between turnover and profit varies wildly between different types of business and so does the number of employees, the size of premises and so on. Some businesses these days have a large part of their turnover in distant sales, via the web; that does not involve any sales floor at all.
	I recognise the problem of arriving at a general definition of a small business in order to give small businesses advantages over larger businesses. I have long been concerned about it, and I do not think that the noble Lord, any more than other people, has solved it.
	The new body that is to be created—the Office for Retail Planning—and the independent examiners who will back it up are additions to the overheads of the nation. We should be sure that they are of benefit. The Office for Retail Planning will sit somewhere between the Competition Commission and the Office of Fair Trading, both of which have the duty to "improve the market", in shorthand terms. The Office for Retail Planning has the duty to further the interests of consumers in relevant markets, but its first duty is to further the interests of citizens in relation to retail planning matters. I find it a bit difficult to understand exactly what is the difference between us as consumers and as citizens in this respect. Our relationship with shops is really as consumers rather than as citizens.
	The primary purpose of the new Office for Retail Planning is to take decisions away from local authorities and to hedge them about with extra guidelines. At the moment, the Secretary of State does that. He has the power to call in decisions and he gives pages and pages of planning guidance. There are books full of planning guidance that has to be to be followed by inspectors if something comes to appeal, and hence it has to be followed by local authorities. That guidance can be altered, and it probably needs to be altered because of the sort of decisions that we have just heard about where supermarkets are allowed even though local authorities do not want them. However, I do not think we need a new body and a different set of guidelines to add to the existing ones to stop local authorities deciding what they think is best for their towns. We should leave more decisions to local authorities, not take them away.
	As the noble Lord said, the Competition Commission has just reviewed groceries. Its proposal for a new ombudsman and extra powers relating to supermarkets' relationships with their suppliers has merit and provides benefits not only to suppliers but also to small firms that compete with the supermarkets. The commission's headline proposal in the planning field aims at the competition between the big supermarket chains, not at the competition between supermarkets and small, local shops or convenience stores. That is the aspect that worries me and the noble Lord, Lord Cotter, not so much the competition between the supermarkets. I want the Secretary of State's planning guidance to give more protection to smaller shops than it does at present. That is the way forward as far as planning is concerned. I do not want a new body to complicate everything further and add to the nation's overheads.
	The noble Lord, Lord Cotter, has taken up from the Competition Commission and others the question of landbanks. The Bill suggests a mechanism for the compulsory purchase of supermarket landbanks. I do not support that, but it is a slightly different matter.
	Another part of the Bill concerns rates. It hints at the idea of lower rates for small businesses but, as the noble Lord said, it does not provide a solution, only a review. At present, the mechanism for deciding business rates is the rateable value. If small businesses in a town are struggling, rents, and hence rateable values, should eventually go down. That is the mechanism at the moment. I am not sure it is working as well as it should, but that is no reason for inventing a new mechanism, although it may be a reason for improving the mechanism that we have. As far as local retail plans are concerned, I would encourage local authorities to have an eye on local retail development in their own plans, which many of them do.
	Overall, the noble Lord, Lord Cotter, is right to draw attention to the problems. I support the message that he wants to send to the Government, as he explained a moment or two ago, but I do not think that the Bill proposes the right solutions. I thought that Liberals were supposed to support Mr Gladstone's principles of free trade and that sort of thing, but the noble Earl, Lord Glasgow, did not seem to support them outside Glasgow, where the public seem to be voting one way and consumers a different way from him. The noble Lord, Lord Cotter, has taken his cue not from Gladstone but from new Labour: ever more nannies and a case of, "A word means what I want it to mean—see the statutory instrument".

Lord Dykes: My Lords, even if parliamentarians have an enthusiastic business background—as I do, mainly in the financial sector in the City—it is their job to legislate on a coherent basis to establish a balance between different factors in our economic society. For people on the Conservative Benches to say that competition is the primordial matter and nothing else matters at all is wrong. It is the same as saying that British society is just concerned with making money, as many people conceive that it is. If that view is correct, society gradually disintegrates. I hope that the new Labour Government do not subscribe to it; there are other things in society as well.
	There is a real crisis here. I was glad that the noble Lord, Lord Cope, said at the beginning of his speech that he supports the Bill, although he was nitpicking and curmudgeonly in his subsequent remarks. I congratulate my noble friend Lord Cotter on introducing the Bill; I am quite proud of the fact that 50 per cent of the speakers in this debate are from the Liberal Democrat Benches. I entirely agree with all the wise remarks made by my noble friend Lord Glasgow, particularly his reference to the ghastly super-shed near his home town.
	There is a real crisis, which the Government have to face. The Competition Commission has totally failed the normative shopkeeper sector, which includes small shops, medium-sized shops and even some small supermarkets—the little local ones that have developed in towns, which have an interesting future and are much more attractive than the giants. The Government have to address this. People can easily say that the Office for Retail Planning is yet another bureaucratic addition to the panoply and that they do not want it because it will cause a lot of extra cost and so on. I am not so sure. It needs to be seriously examined as a concept.
	We remember the demise of rent controls and the effect that that had on hapless tenants in the old days when the market in this country became completely free. Some far more successful European economies, such as those of Germany, France and Italy—we boast in Britain that we are the primordial economy in Europe, but we take our statistics rather selectively—still retain some of those controls because they know that the reality is that the average power of the average landlord is higher than the average power of the average tenant. It is as simple as that.
	In Britain, under the complacent laziness and obduracy of the Competition Commission, the supermarkets have now reached 75 per cent penetration. I declare two interests: I am an officer of the All-Party Group on Retail Industry—at least, at the most recent AGM I was—and I live in France for a considerable amount of time and study the development of the retail sector there. I entirely agree with what the Federation of Small Businesses said about the situation in France. Seventy-five per cent is too much. It represents a breach of the Competition Commission's duties. Thousands of small shops often offer cheaper prices than supermarkets, particularly after the latter stages of a supermarket being installed when, as we know, they do loss-leading.
	By the way, what about the deliberate sale of alcohol at very low prices? That is a scandal that the supermarkets have allowed to develop. Tesco is now trying hurriedly to restore the balance by making proposals to the Government, but why did it sell cheap alcohol at the entrance display units of its supermarkets? That is disgraceful, irresponsible conduct, just to make money, profits and turnover. These things are unacceptable in a civilised society.
	Of course, we believe in the healthy effects of competition between different entities of all sizes and, indeed, competition between the supermarkets has been a great benefit, to hard-pressed housewives particularly, but also to househusbands nowadays, who rush around doing the shopping quickly. But it is not all that. Small shops have an enormous amount to offer. They are social and human centres as well. That is also important. If only money, cheap prices and nothing else matter, new Labour is letting down the public.
	I support most of the Bill, although it needs meticulous study in Committee to make sure that the arguments are sound. The Bill is not fundamentally against supermarkets; it is against their excessive, overweening power and their ability strongly and stridently to bully local authorities and even to intimidate inspectors—the inspector appeal system is lamentable and pathetic. As an MP in Harrow, I saw the first stages of that. Appeals were hopeless because the inspector rightly based his conclusions just on legalistic, commercial and other judicial matters; they had nothing to do with the intrinsic interests of the local community. Time and again, the supermarket representatives went out with a smile on their faces after the inspector had upheld their appeal. The local authorities were completely undermined by this process.
	We wait to hear the Minister's views. He is the only Labour speaker today—I notice that there are no Back-Benchers. We hope that he will not demolish the idea of an Office for Retail Planning, because we need a specific, new entity—one hopes that its overheads will be minimal and modest if it is created—to hold the balance between hard-pressed local authorities, which need increasing revenue from businesses as well as council tax payers, and the local community, which comprises a broad range of interests.
	Living in France and seeing retail development there, I can say how different the situation is. This country needs to learn some lessons from European countries. It is no good our saying, "We know best. We have nothing to learn from these countries". I say as an aside that Europe has the most successful currency in the world; we ought to join it; we should have joined it years ago, but we have not—but that is another matter. France has control mechanisms between applications from supermarkets and the legitimate interests of local shopkeepers. Napoleon was wrong when he said that only Britain was a nation of shopkeepers, because France is, too. There are thousands of shops there, as we know.
	The noble Lord, Lord Graham of Edmonton, looks as though he is about to rise, but I would prefer not to give way to him for reasons of time; I do not want to speak for too long. However, I give way.

Lord Graham of Edmonton: My Lords, I thank the noble Lord for giving way. Given my association with the retail trade, I take an interest in the subject. Obliquely, I declare that which is registered. What mechanism will be applied so that the consumer is free to shop where they wish? The car-borne shopper is a phenomenon of the past 30 or 40 years. They exercise their right of choice and go to the large hypermarket or out-of-town supermarket, running away from what was in my boyhood the corner shop. Whether it was a Co-op or any other shop, the corner shop was the primary source of goods. What economic mechanism will provide the small shop with the additional revenue that it will require? I understand what the noble Lord, Lord Cope of Berkeley, said about running away from regulation and interference. What does the noble Lord, Lord Dykes, believe can be done to sustain a shop in an area where the local populace, by its own choice, has gone elsewhere and brought about its downfall?

Lord Dykes: My Lords, I do not like to say it, but the noble Lord went slightly beyond the privilege of an intervention, which rapidly became a speech. He could have put his name down for the debate and made his own speech. When the Bill goes into Committee, many of those points can be gone into in great depth. There is a need to create a specific mechanism of control that prevents the local authority from being undermined by the existing mechanisms, which are stupid and unfair on the public. It is an illusion that they help just the large numbers of people who visit supermarkets regularly and do not go near small shops. That is an illusion for the present which turns into a disaster for the future.
	France has more of those mechanisms, yet they do not penalise the supermarkets—there is healthy competition between them. They are now the equivalent of the big-shed groups that we have in this country, making up something like 45 per cent of the retail total. I speak to many officials in local authorities and central government in France, where there are strong trade unions to defend members' interests, which is regarded as a sin in Britain. There are other mechanisms, too, and price controls in certain areas. The European Commission always looks closely at France to make sure that it does not breach European rules. However, irrespective of party—apart from on the extreme fringes—its attitude is to provide the necessary economic and social balance through these mechanisms. That is why the noble Lord needs to make his own speech. He could then provide his own suggestions for an appropriate mechanism.
	I shall say one more thing about the need for local interests to be better represented. If local councillors could do that properly within our system, that would be fine. I make no criticism of them; they are noble and heroic people, in many ways struggling with a very difficult and unpopular job. Most people do not want to be local councillors in most local authority areas—it is very sad—because central government has demoralised them so much. It started with the Conservative Government under the noble Baroness, Lady Thatcher, in the old days. The morale, ethos and élan of local government were destroyed by the Conservative Government's attack not only on the Greater London Council, which I publicly opposed at the time, but also on other local authority mechanisms. One therefore needs the additional control system that is suggested in the Bill, or something along its lines.
	I am sure that my noble friend Lord Cotter will be the first to suggest improvements and modifications to the central ideas in the text. I commend him for many other aspects of the Bill. Few Peers are able to introduce a Bill that is so well drafted—I may embarrass him by saying so—and so full of persuasive content. It is on that note, therefore, that I plead with the Government to restore the morale of local councils by introducing some kind of support system and by giving a clear signal to the supermarkets that the days of wild, super-normal profits and bonanzas are over. Supermarkets must be responsible, rein back their enthusiasm and not destroy local communities.

Baroness O'Cathain: My Lords, I have given notice of my intention to speak in the gap. I also declare a very old interest as a director of Tesco for 15 years, but that is seven and a half years old. When I rapidly read the Bill this morning, I was deeply concerned. I ally with my noble friend Lord Cope of Berkeley about the setting-up of an Office for Retail Planning. Clause 18(2)(a) states that the authority,
	"must comply with the direction",
	of the ORP. What costs will be put on the customer? The powers of the regulator, if it is called that, are far too wide. Where is the real customer research? No speaker so far has mentioned the fact that if local shops provide the goods and the services, people will flock to them and buy there instead of at the local supermarkets. There is a mass of research about that; I can provide noble Lords with a lot of it if they want to talk about it. The customer's wants and needs have been totally ignored. The noble Earl, Lord Glasgow, said that he could not understand why 70 per cent of people shop in a supermarket. They want to. I hope that we will not take the quixotic approach of trying to regulate something without any customer input whatever.

Lord McNally: My Lords, surely the noble Lord, Lord Cope, with his experience, can see the difference between a Glasgow Liberal and a Manchester Liberal. I welcome the Bill and congratulate the noble Lord, Lord Cotter, who has been a long-standing champion of small business, on providing the basis for such a useful debate on such an important topic. We are talking about an important part of the British economy. The retail sector accounts for some 20 per cent of the UK economy, so we need to get the balance right in a number of ways. We need to provide a structure that encourages the small retailer while not increasing the burdens on both business and local authorities. The habit of government in recent years of adding responsibilities to local authorities without providing resources and then bemoaning rate rises has already been referred to. We need to get that balance right. We also need to get the balance right between the large retailer and the small. The noble Lord, Lord Cotter, and the noble Earl, Lord Glasgow, emphasised the community benefit of small retailers, which cannot be overstated.
	We must not be too nostalgic, however. I declare an interest as director-general of the Retail Consortium in the mid-1980s, when my standard speech was to say that you cannot make water flow uphill and you cannot make shoppers shop where they do not want to shop. I still think that that is true. I also had a wonderful speech about the new shopping leisure experience, which used to amuse my wife, since wild horses could not drag me out shopping. I was the "wham bam thank you mam" type of shopper, but I was assured that shopping had moved into a new era of the leisure experience, and I think that that is true.
	Although the noble Earl, Lord Glasgow, may be right that people often think of big supermarkets and out-of-town supermarkets as baddies, there is no doubt that in my lifetime we have seen a shopping revolution for the better. You can see the impact for consumers from the poorest to the richest. You only have to look at pre-war photographs, in which you can tell who were working people and who were wealthier, simply by their dress. That is not so today: people can go to the big supermarkets and retail outlets and get their suits—the same applies to food. If you go to any of the poorer boroughs of London and go into a supermarket, you can see what a range of food is available.
	So let us acknowledge, as the noble Earl, Lord Glasgow, and the noble Lord, Lord Dykes, did, that our retail industry is a success story. We have one of the most efficient and competitive retail industries in the world. However, no one can rest on their laurels. In the mid-1980s, when shopping centres were being developed, the main task of the developer was to try to attract a Boots, a Marks & Spencer and a Sainsbury's. Those were the three flagships, but all three of them have in the past 20 years gone through some very choppy waters. At the time, Tesco was still in its "pile it high and sell it cheap" stage. So retailers are in a very competitive business and they are only as good as their reputation today and tomorrow—they cannot rest on their laurels.
	There is no doubt that shopping malls and out-of-town and edge-of-town centres respond to real demand, but we know, too, that such expansion has its downsides. The noble Lord, Lord Cotter, referred to what in the United States is called "doughnutting"—drawing and sucking out all retail activities from the centres of towns, so that town centres become dead. You can drive through them and see them boarded up and dead, which is not good for any community. I was pleased that the noble Lord, Lord Graham, intervened and I wish that he had put his name down to speak, because the co-operative movement has a role to play in some of the problems that he raised. There should be an opportunity for rate variation and there should be initiatives. As the noble Baroness, Lady O'Cathain, said, there is no doubt that town centres can fight back, with easier parking or park and ride, clearer and better security, niche marketing and quality marketing, pedestrianisation and good signage and street furniture. All together, they can make a town make a good offer.
	Where the Bill is right is in saying that market forces alone will not provide the answer. The noble Lord, Lord Cope, said that the market will deal with the problem because, if businesses are failing, rents and rateable value will go down. In the town where I live, St Albans, we have recently lost from the town centre an excellent toyshop, an excellent art materials shop and an excellent bookshop. However, we have gained three bookmakers in the High Street. Sometimes it is not simply a matter of rents being forced down; the fact is that others come in who may not necessarily add to the total offer of a town centre. As travel writers often bemoan, one problem with our high streets now is that you can close your eyes and without looking you can say which hamburger chain, building society and bookmaker will be there. That distorts the noble Lord's market.

Lord Cope of Berkeley: My Lords, the point that I was trying to make was that the mechanism for deciding rates is the rateable value, which is supposed to be self-correcting. I accept that it is not—the noble Lord makes a fair point in that sense—with regard to bookmakers, grocers and art shops or bookshops. But that is what we should look at; we should not try to do it through planning, although the Secretary of State's guidance needs changing to improve the situation for small shops.

Lord McNally: My Lords, I welcome that intervention. We can see how we would develop that idea in relation to competition. Another thing that struck me during the noble Lord's speech was that it might be necessary to broaden the duties of the Office of Fair Trading and the Competition Commission to give them more of a social and community view when making their decisions. If we leave it to a mud-wrestling competition between the big four, we will not deal with the parallel problem that has been raised in the debate about how we keep quality and diversity in our town centres. That may have to do with some flexibility on rating, but it may also have to do with planning.
	I share the concerns expressed by the noble Lord, Lord Dykes, and others. We all know about the power of the big companies in securing planning permission and the fact that every local authority has to consider how far it is going to take a fight on planning permission against a big company with deep pockets. Supermarkets have a reputation both for bullying and for hoarding, which they should be wary about if they do not want to provoke the kind of interventionist response that has been warned against, particularly from the Conservative Benches.
	Finally, I was glad that the noble Lord, Lord Graham, was present for the debate and that he contributed. I have often thought that, particularly at the village level, there is a need for a chemist, a food store and a post office, which might be combined in a co-operative effort.
	I share many of the views that have been expressed. As with many Private Members' Bills, this will not necessarily solve all the problems, but the problems that it raises are real. We need to get the balance right between the benefit of a super-efficient and effective large retail sector and the community and social benefits that come from having vibrant local town centres.

Lord Dixon-Smith: My Lords, I am very grateful to the noble Lord, Lord Cotter, for explaining his Bill to us this morning and, more importantly, giving us an opportunity to debate the whole subject of town centres, retail and community, which is of fundamental interest to all of us. It is a very complex matter, to which there are no simple solutions. I am also grateful to his noble friend Lord McNally for introducing an element of reality into what I would call the noises on my right. We have to deal with society as it is and not, however much we wish to do so, as we would like it to be.
	The whole matter is of fundamental importance to medium and small communities as you move further away from metropolitan areas. The presence of supermarkets is universal throughout the south-east and they are things that we all live with and use. Historically, we have all watched this development. There is nothing new in the problem. In my early days as an elected member in county hall, it was a regular problem when I met people who asked, "What are we going to do about the shops that are closing down?". When I suggested that they might start using them, what happened? They went to a supermarket eight miles away, because sadly but realistically, as the local grocer said—he ran a very attractive business with a very good delicatessen—"They can go there and buy goods at the price that I have to buy them at from my wholesaler".
	We have to face that reality. There was another problem then, which is also still around—the closure of rural schools. I shall not tell the House what I suggested as the solution to that, but noble Lords can imagine. It would have worked, but people were not prepared to take it up. The truth is that society moves on. We may be able to regulate planning, and we may be able to regulate retail development but, as the noble Lord, Lord Graham, said, we cannot, must not and should not regulate customers. That is one of the realities of this situation.
	We have to live in the world as it is. We in this country benefit and have benefited enormously from the change that has taken place over the past 30 years. The average household spending on food is a lower proportion of income than it has ever been. That may change in the future, but it is very good and it is very much in everyone's interests. The way in which we organise our lives, with a far higher proportion of housewives working today, is enormously beneficial as well. They have less time to shop. I cannot remember who talked about spending two hours wandering up and down the high street from shop to shop, whereas now you can go and do the whole shop in 30 minutes in one place and load it into the boot of your car. Those are the realities of modern life.
	I do not share the adulation of the noble Lord, Lord Dykes, for France, although I also have a house there. There are wonderful things about French society, and I would not have a house there if there were not. The reality in France is that the unemployment rate is well beyond double the unemployment rate here. There are huge social problems, and there is huge concern among thinking French people about the way in which French society is developing. They have considerable problems. Although they have been very successful as a semi-regulated society, one of the reasons that the system works is that they have four times as much land per head of population as we do in this country. Although I am an admirer of France, that does not go to the point that the noble Lord, Lord Dykes, was suggesting.
	With my long experience in local government, I have considerable concerns about the proposed Office for Retail Planning. It seems to be suggested that we can regulate this problem away and stop the supermarkets going out of town, and local authorities will have to have retail development plans and so on. Life is not like that. Local authorities and district planning authorities already do everything that they can to try to preserve their town centres and to try to keep the competition levels as they see it in their communities at a reasonable base. They are as frustrated as the tone of this debate is about the reality that, all too often, the supermarkets can go to planning appeal and get what they were asking for via that route.
	The solution is not further regulation and more and more dense and expensive regulation. It would be expensive; if we were to have this system in place it would be horrendously expensive. The solution would be a change of approach from the Minister and the relevant government department to planning appeals of this nature. There may be a good legal reason why that has not arisen so far, but I have never particularly heard one. In matters such as this, colleagues who serve with me in local government and colleagues who have long since left local government all too often are not masters in their own house. There are good reasons for that too. One of the problems with this Bill is that it does nothing to change that situation anyway. The powers of the Minister and the powers of planning appeals are written into the system for very good reason, and there would be great difficulty in trying to change that.
	Much as I sympathise with the ambition that the noble Lord, Lord Cotter, has expressed, on balance, my conclusion is that, great and good though his intentions are, what he is proposing would not achieve the results that he hopes. On that basis, I do not support the Bill, but none the less I am very grateful to him for enabling us to have this debate on an important subject that involves all of us. Even I have to go shopping occasionally for my dear wife, and it was quite a shock to the system when I began having to do so. As she said, "It will teach you the facts of life, dear". The facts of life are what this extremely useful debate is really about.

Lord Bassam of Brighton: My Lords, I congratulate the noble Lord, Lord Cotter, on introducing the Bill this morning. It has certainly stimulated a valuable debate on a subject that clearly exercises many noble Lords. I have listened to a number of noble Lords this morning talking with great wisdom about the retail sector, and they all seem to have said the same thing in the end; that they do not go shopping with their wives. I warn noble Lords about this. There is a danger in setting those words out in Hansard. People do read them.
	I listened carefully to what the noble Lord, Lord Cotter, said, and I thought that he was overly gloomy in his analysis when he talked about the danger of us moving towards clone towns and ghost towns. I thought that was too dismal a general approach in introduction. Of course, I understand the principles behind the Bill, and the objective of attempting to revitalise our towns and city centres through retail is noble and one which, from listening to the contributions this morning, I think we all share. Of course, we need to do much more to revitalise our high street by encouraging more small retailers to open shops there and for those shops to be sustained. Clearly, the nervousness expressed by the noble Lord, Lord Cotter, has touched a raw nerve.
	Although the noble Lord was well supported on the Liberal Democrat Benches, the debate was fairly wide-ranging and well balanced. For me, the noble Lord, Lord Cope, was right; he said that he supported the Bill until he read it. When he did so, he could not find a great deal to support. That in the end is the way that I will approach the issue. The noble Lord, Lord McNally, in his thoughtful reflections on the Bill, expressed great support for it and, again, as he went though his story, he, too, was concerned that we get the balance right. While he welcomed the Bill as a valuable tool for discussion, I suspect that he could see some of its flaws.
	We had our "Ooh la la" moment, with the noble Lord, Lord Dykes, who told us about the wonders of French shopping and community life. Like him, I love France and its shops; but I live in a part of the world where booze cruising became a great thing for a short while, when friends of mine went over the water from Newhaven to Dieppe, hit the local hypermarket, cleaned it out and brought back all their drink and goodies. That of course did not do much for the small shops around Dieppe, but it probably did quite a lot for local trade in terms of bringing stuff back to their home town and having a good time with it—and perhaps selling it on sometimes.
	We need a broader and more corrective view. I am grateful to the noble Lord, Lord Dixon-Smith, for his contribution because he made the important observation that we live in the world as it is and we have to deal with the world as it is. He reminded us, too, that local authorities have an important role to play and I shall say more about that. Perhaps I should make one comment about the contribution of the noble Baroness, Lady O'Cathain. She owned up to being a Tesco director in a past life and warned us about the dangers of undermining local authorities. I well understand that, but it is strange that in Hove, which is now part of the city of Brighton and Hove, you cannot avoid going into a Tesco shop. Tesco has some six stores in an area with a population of some 100,000. Although I am sure that Tesco is a fine purveyor of foods, wines, spirits and other goods that we all enjoy, I must say that I have some concerns about the way that it dominates that town's retail market.
	Let us come to the Bill. As the noble Earl, Lord Glasgow, said, we must give smaller shops a fair chance to survive. Is this Bill the right way to do it? In the end, I shall conclude that it is not. Our local high streets and town centres are crucial to creating sustainable communities and as a Government we recognise the importance that small shops can make to the vitality, viability and character of our high streets, to communities and, more critically, to the national economy.
	However, as I said, the Government do not consider that introducing additional legislation to promote small businesses, as is the intention of the Bill, is necessary or desirable. We have taken significant steps to strengthen the powers and incentives available to local authorities—which have a critical role—to promote their local areas. The main problem of the Bill is that in introducing a new central body such as the Office for Retail Planning, it will restrict and further undermine local decision-making processes and is contrary to the flavour, intent and general drift of our local government White Paper proposals to strengthen local leadership. The introduction of new-style retail development plans will not help further to streamline the planning system, which is contrary to the reforms that we set out in our White Paper, Planning for a Sustainable Future.
	As I see it, there is no reason why local authorities cannot already develop local retail plans. I urge local authorities to get on and do it, because the good local authorities—those with strong and effective leadership—are doing exactly that through their planning processes. Do not undermine that planning process by imposing on top of that a centralising Office for Retail Planning. That would take powers away from the locality and put them in the wrong place. It is for local people to determine issues and to take a lead in shaping the local commercial environment. Of course the planning process has a part to play in that. It needs good leadership and effective local governance.
	Small businesses already receive wide-ranging support from Business Link and financial sector small business advisers. We have also introduced small business relief for sole occupiers and the rural rate relief scheme enables local authorities to provide critical support for important institutions such as village shops. The level of small business relief given in 2006-07 was some £252 million. By the end of December 2006, some 392,000 hereditaments were reported by local authorities as claiming small business rate relief. That is a significant figure. We are helping those small businesses with rate relief in a profound way, and that relief is being claimed. It is worth drawing attention also to the success of the rural rate relief scheme; in 2006-07 we provided that relief to the tune of some £7.9 million. Small businesses in rural communities are beginning to benefit from that government scheme, and we are delighted that the relief is being taken up and used as it shows that people are much more aware of it.
	The Local Authority Business Growth Incentives scheme further incentivises the promotion of local business growth. We have enabled the creation of Business Improvement Districts, BIDs, which enable partnerships between local authorities and the local business communities to be set up and which provide a means to improve local high streets. I live in a city where one of those schemes has been adopted in the North Laine area; on the evidence in the past year or so, the extra improvement to the street scene and the extra security that has been provided through the buying in of street stewards, security staff and so on seem to be making a commendable difference to the feel of that area, which has very many small businesses in it. The rate of business reformation is very healthy in an area that is benefiting from the operation of BIDs.
	We are making other reforms. Under our review of subnational economic development and regeneration we are looking further to strengthen the local authority role in economic development by introducing a statutory economic assessment duty on which we will be consulting further. We are also consulting on a draft new planning policy statement on sustainable economic development, PPS4, which, when finalised, will ask local authorities to plan more proactively for the needs of businesses, large and small. It is also important to recognise that the Local Government Act 2000 gives local authorities in England and Wales a wide-ranging power to promote the economic, social and environmental well-being of their areas. Ultimately, however, the structure of local businesses has to be a commercial decision for the proprietors, and central or local government do not have a remit to influence their ownership.
	Our policy is to simplify publicly funded support for business, not complicate it further. We do not support a review of business rates as proposed in Part 1. We do not, therefore, believe that further legislation to support small retail premises, as envisaged in the Bill, should be introduced. We already have a well established planning system that provides a positive framework in which local authorities are required to plan for the needs of small and large businesses. Under the Planning and Compulsory Purchase Act 2004 and the related regulations, local authorities are required to prepare statutory development plans for their areas. That includes plans to guide retail and town centre development.
	Our policy in Planning Policy Statement 6: Planning for Town Centres asks local authorities to plan proactively for high streets and retail development by assessing the impact of development proposals and having proactive local policies that take account of the needs of all types of shops and town centre facilities. Our policy gives local authorities wide-ranging tools with which to promote the needs of business, and many local authorities are using them effectively. Those tools include the ability to control changes of use; to impose planning conditions on new proposals to restrict the size of shops and the goods sold in them; and, where justified, to seek financial contributions to help regenerate secondary shopping areas.
	The policy also requires local authorities to assess the impact of their planning policies and to test the impact of unplanned proposals on town centres and retail premises, especially larger proposals such as superstores on the edge of or outside town centres. The noble Earl, Lord Glasgow, referred to one horror story in the Glasgow area; we could all come up with an example. Those things are probably more in the past than in the future, because the success of our policy over the past 10 years—a policy that has been carried on across government—has led to a rebalancing in favour of city and town centres as opposed to out-of-town development.
	Such impact assessments, where required, need to be prepared by a developer and submitted with a planning application. We therefore see no need for separate legislation which requires retail development plans to take into account the impact of different types and classes of development, as proposed in Part 3.
	Perhaps here I should say a little more about our proposals to improve the effectiveness of PPS6, which we announced in the planning White Paper and on which we will shortly be consulting. It provides an opportunity further to strengthen the policy framework through three mechanisms. First, we propose a new impact test that allows local authorities more effectively to assess the impact of retail proposals outside town centres. Secondly, we will strengthen our policy which asks local authorities to plan proactively for their town centres—in other words, to get a grip on what is going on and to think very carefully about what they do, so that they meet the needs of whole communities in partnership with retailers and other stakeholders. Finally, that policy approach will produce new guidance to assist local authorities and developers in the implementation of the town centre policy.
	We also have a well established planning inspectorate whose experienced independent inspectors, who are appointed by the Secretary of State, routinely examine the soundness of emerging development plans and determine contentious planning applications in the context of our policies and the local circumstances. There is therefore no need for an Office for Retail Planning to oversee the preparation of local retail development plans, as set out in the Bill, or to intervene in planning applications for certain classes of retail development, as proposed. We do not see the need for the creation of an additional layer of regulation and bureaucracy in the form of an independent Office for Retail Planning to oversee the preparation of new retail development plans.
	It is also important to recognise that there are limitations on the scope of the planning system to consider issues such as competition, as proposed under Clause 5, which is the responsibility of the competition authorities. The planning system cannot, for example, routinely control the occupier of a building, so the proposals in the Bill would simply not be workable.
	However, as we said in the planning White Paper, we will look to ensure that our policy improvements to PPS6 will promote competition and consumer choice and that we do not unduly or disproportionately constrain the market. In addressing those issues, we have said that we will take into account the final conclusions of the Competition Commission grocery inquiry, to which several noble Lords, including the noble Lord, Lord Cope, referred. The Competition Commission has just published its provisional remedies, which we generally welcome, but we need to bear in mind that its proposals are not yet final. We will need to think very carefully about what the proposed introduction of a competition test into the planning system would mean for businesses, local authorities, consumers and communities before we finalise our consideration on those issues, but it is a welcome proposition and one which should stimulate further debate.
	In closing, although we recognise the need to support small retail premises, it is important to recognise that we already have a well established legislative and policy framework to enable the needs of the retail sector and small businesses to be addressed. We are also bringing forward further initiatives to help in planning for and offering support to retail development. Therefore, ultimately, we argue that the introduction of further legislation, as set out in the Bill, would not be in the interests of further devolving powers to a local level and incentivising local authorities to take the firm action we believe that they need to take, to reflect on local needs and to stimulate local business. It would put additional burdens on local authorities and would not help further to streamline what is sometimes an overly bureaucratic planning system. For those reasons, we cannot support the Bill.
	I think that I have covered most of the points that noble Lords have raised. I am conscious that there is the important and heady business of considering Lords reform to come. For those reasons, much as I have enjoyed and welcome this debate, it is probably only right that I leave it there and thank the noble Lord, Lord Cotter, for the precise and courteous way in which he introduced his thoughtful Bill.

Lord Cotter: My Lords, I thank the Minister for attending. Of course there is important business to follow—reform of the House of Lords—although I submit that a lot of people out there are also very concerned about the issue that I have raised today. I appreciate seeing the noble Lord, Lord Brennan, here, who I know has a great interest in the retail field. I certainly hope to use some of his experience in future when we proceed on this issue.
	I guess that if I had produced a Bill of warm words and hopeful aspirations today, it would have been fantastic. Everyone would have stood up and said this is great, wonderful, excellently good, or whatever and we would all have gone away with a glow and been very happy about ourselves. Instead, I have introduced a Bill trying to address the issue. By the very fact of trying to do so in some detail, you come up against objections and concerns—I realise that there are concerns. I say to the Minister and others that without some tangible proposals, we risk the continuing demise of our small shops in this country. The noble Earl, Lord Glasgow, in particular, drew into focus the issue of local shops, their social impact on people and the fact that outlets that are local shops foster other businesses of all natures, be it plumbers or whoever. Those are the key issues: fostering and keeping local communities going is the important issue. I urge the Minister again to consider this debate and the points made not just by me but by people outside, including the trade organisations, which almost all support the Bill—with concerns that have rightly been raised.
	I was very pleased when the noble Lord, Lord Cope, started to speak. I welcomed his support, with his distinguished experience in the business field. Then, of course, my heart dropped. I could probably do without that sort of support. He went on to a detailed discussion of all aspects of the Bill, trying to destroy many of my implementation measures. I take, for example, his talk about the Bill bullying local councils. For God's sake, it is the big four and the powerful people who bully local councils. The Bill's intention is not to bully local councils; it is to give them power to ensure that they are not bullied in future. If local councils mean anything—and they certainly do on these Benches—they are there to represent the people of this country and they must be strengthened in that representation. In that respect, I would say that people are right to raise those concerns, but the fact is that if you have a detailed Bill of this nature, there will be issues that people will take up. Without detail and some muscle, nothing will change.
	I also refer the Minister and others to Clause 13, in Part 2, which is a whole page on the duties to review regulatory burdens. We have written this into the Bill. It is quite a lengthy part of the Bill, but it is important that there is at the very basis of the Bill a duty to review and to ensure that no burden is put on to other people. The noble Lord, Lord Cope, in particular talked about the points that needed to be addressed and about the need not to place burdens.
	It was much appreciated that the Minister spoke in detail about what I propose, but I take issue with him about rates. It is very easy, as we all know, to come up with statistics, total them all up and say that so many millions are spent here, there and everywhere. I ask the Minister to say, "I agree that small shops appreciate what is being done, but not enough is being done", because the issue is the proportionate amount that small shops pay against the very big businesses. I am sorry, am I running over time? In that case, I shall try to speed up so that I save something for Committee. I thank my noble friend Lord McNally and others for what they have said, and I thank my noble friend Lord Dykes, who supported my view that we should look elsewhere and should be concerned not simply to talk about competition but to address the detailed issues.
	Given the time left, noble Lords will be denied the slightly light hearted comment that I was going to make. In fact, may I have a moment to say that I have a great task in front of me in promoting this Bill? This morning before I came to the Chamber, I had my Force wheat flakes. For those who do not know, Force wheat flakes were the first manufactured breakfast cereal, introduced into the UK in 1902. I have not exactly been eating them ever since, but I have been eating them ever since my childhood. Some will know of the iconic Sunny Jim, who was probably one of the first marketing characters. He is still going strong, and his slogan is:
	"High o'er the fence leaps Sunny Jim; Force is the food that raises him!".
	Clearly by having only one bowl of Force cereal this morning, I have not quite overcome the fence, but I hope that, by taking a few in the future, I can renew my efforts and go forward with the urgent need to address this issue.
	On Question, Bill read a second time, and committed to a Committee of the Whole House.

House of Lords (Amendment) Bill [HL]

Lord Avebury: My Lords, I beg to move that this Bill be now read a second time.
	It might be useful to explain first why this Bill is being reintroduced when the Bill of my noble friend Lord Steel, of which it is a subset, had its Second Reading and first day in Committee just over a month ago. My noble friend's Bill has attracted a large number of amendments, and it seems unlikely that the time needed to dispose of them will be available. My Bill is concerned with only one issue: the by-elections for maintaining the number of hereditary Peers at 92, as provided for in the Weatherill amendment of 1999. None of the existing hereditary Peers would be displaced by the Bill, nor would the Earl Marshal and the Lord Great Chamberlain be affected by it, and the hope was that such a modest and uncontentious reform would be readily accepted and would attract only a very short Committee stage. However, if any noble Lord was determined to oppose it, purely on the grounds that the Weatherill scheme was binding on us until the second stage of comprehensive reform, they would find that it is not susceptible to the wide range of amendments that have been tabled to my noble friend's Bill. I am advised that its strictly limited purposes restrict the scope of amendments to the situation of the hereditaries, and would not allow for debates on the many other issues raised in the 200 or so amendments to my noble friend's Bill.

Lord Strathclyde: My Lords, I assure the noble Lord that what he has just said is not my view. This is a Bill to amend the House of Lords Act 1999. Therefore, any amendment in Committee that amended that Act would be wholly in order.

Lord Avebury: My Lords, only an amendment that amended Section 2 of that Act would be in order, but I suggest to the noble Lord that if he wants to test it, he should go to the Public Bill Office and table his wide-ranging amendments. I have already had the privilege of receiving detailed advice from the Public Bill Office, and I suggest that the noble Lord does the same.

Lord Strathclyde: My Lords, I am very much looking forward to amending it, and amending it substantially, in Committee.

Lord Avebury: My Lords, we will see about that when the time comes.

Lord Trefgarne: My Lords, I am afraid that I rise to support my noble friend Lord Strathclyde. If the noble Lord, Lord Avebury, thinks that this new doctrine, expounded originally by the noble Lord, Lord Steel, that amendments to any Private Member's Bill can be made only in accordance with the principles of the Bill as set down by the promoter of the Bill, then I am afraid that both noble Lords are bitterly mistaken. The Long Title of the Bill is absolutely clear. It is not confined to Section 2, as the noble Lord may imagine; it is: "Amend the House of Lords Act 1999". It does not confine itself to any particular passage in that Act, and I assure the noble Lord that if this Bill receives another reading, as I dare say it will later on, I for one will table large numbers of amendments to deal with a number of defects, as I see them, in the 1999 Act.

Lord Avebury: My Lords, the noble Lord is frivolously wasting the time of the House when he has every opportunity to test whether his opinion or mine is correct by going to the Public Bill Office and seeking to table his amendments on the conclusion of Second Reading. Might I suggest that in order to avoid detailed discussion on this matter, noble Lords reserve their judgment until they have had the opportunity of doing so?

Lord Trefgarne: My Lords, I strongly object to the noble Lord saying that an intervention of mine, which was wholly serious, was frivolous. It was nothing of the sort. If anything is frivolous, it is the noble Lord's Bill.

Lord Avebury: My Lords, we will see about that. After all, that is what we are here to discuss. If the noble Lord will allow me to get on with my speech, he is welcome to make his speech later on and to try to put down whatever amendments he likes.
	As your Lordships know, the 1999 compromise settlement on the composition of the House was that 92 hereditary Peers, elected by their colleagues voting within party groups, were retained. That was the deal made by the noble and learned Lord, Lord Irvine of Lairg.

Lord Geddes: My Lords, what the noble Lord has just said is not strictly accurate. The 92 were not all elected by party groups; 15 of the 92 were elected by the whole House.

Lord Avebury: My Lords, that is perfectly correct. Seventy-five were elected by your Lordships, there were 15 chairmen of the committees and two royal officers of state.
	As I was saying, that was the deal made by the noble and learned Lord, Lord Irvine of Lairg, and the noble Viscount, Lord Cranborne—now the noble Marquess, Lord Salisbury. It was subsequently modified by the Weatherill amendments so that until the next stage of the reform process, whenever a noble Lord dies there is a by-election within the remaining hereditaries of his group to keep the number constant.

Lord Campbell of Alloway: My Lords, I did not intend to speak but I happen to know, because I was told by the noble Marquess, Lord Salisbury—the then noble Viscount, Lord Cranborne—that that was not modified. That was part of the verbal deal made between him and the noble and learned Lord, Lord Irvine. I only intervene. I am not speaking. I have said more than enough and I am leaving this debate. I just want to get that straight on the record. That was a deal between those two Members of the House and it has to be honoured.

Lord Avebury: My Lords, the noble Lord may have a very good memory, but others may think that there is some doubt about this, in particular, the noble Lord, Lord Hunt. In Committee on my noble friend's Bill, he said:
	"There can be argument about whether an amendment that in time reduces that 10 per cent is actually a departure".—[Official Report, 17/1/08; col. 1521.]
	That is a departure from the original bargain made between the noble and learned Lord and the noble Marquess, Lord Salisbury—the then noble Viscount, Lord Cranborne.

Lord Lea of Crondall: My Lords, there have been a number of interventions.

Noble Lords: Order.

Baroness Ramsay of Cartvale: My Lords, he was on the back row. Yes, he can speak.

Lord Lea of Crondall: My Lords, I am all right in the middle of the back row.

Baroness Ramsay of Cartvale: Absolutely.

Lord Lea of Crondall: A number of noble Lords opposite have quoted a so-called deal between noble Marquess, Lord Salisbury and the noble and learned Lord, Lord Irvine. Can I assume that if the noble and learned Lord says that their interpretation is not correct, they will remove all these objections?

Lord Avebury: My Lords, that is a good question, which we may come to in Committee. I have spoken to the noble and learned Lord, Lord Irvine of Lairg, and I hope that he will have refreshed his memory by looking at the correspondence and the papers by the time we are in Committee. Therefore, let us not waste any further time arguing about precisely what the bargain was. Let us get on with talking about the Bill as it is.
	It surely cannot have been the intention of the two noble Lords that a very large number of hereditary Peers should have the right in perpetuity to confirm membership of the legislature on some other hereditary Peer who belongs to their party, a process which has had no parallel since the pocket boroughs were abolished in 1832.

Lord Strathclyde: My Lords, I apologise to the noble Lord for interrupting him yet again, but he simply cannot go on saying these things that are not based in fact. The by-elections took place only after the end of the first Session of the following Parliament and only because a stage two reform had not taken place. I am sure that noble Lords will speak to the noble and learned Lord, Lord Irvine of Lairg. His view, and those of others in the House—if one re-reads those debates, one will see this—was that it was extremely unlikely that the by-elections would ever take place. They took place only because that Bill did not come forward.

Lord Avebury: My Lords, the noble Lord confirms the expectations that people had at the time that the process of by-elections would be a purely limited and temporary phenomenon. At the time, that was said by the noble Baroness, Lady Jay, the then Leader of the House. So I thank him very much for strengthening the case that I am making. It was never the intention that the supply of hereditary legislators, by means of these elections in which the right to vote is confined to the handful of hereditary Peers, should continue indefinitely, a process which I submit is bizarre, irrational and undemocratic. It was sold to the House only on the basis that it was a short-term, temporary fix. So far, it has lasted for nine years and on the most optimistic assumptions, it will continue for the next three.

Lord Trefgarne: My Lords—

Lord Bach: My Lords, I do not want to be a spoilsport. I know when the House is having fun, I hope as much as anyone, but this is a Second Reading. It is important that the mover of the Bill should be allowed to make his Second Reading speech without too many interruptions. Of course, interruptions are allowed, but noble Lords will have an opportunity to make their own speech and be able to answer back. I hope that noble Lords will forgive me, but it is time to allow the mover of the speech to get on. Then we can move on with the debate. I hope that this is not a wrong interruption.

Lord Trefgarne: My Lords—

Lord Avebury: My Lords, I am grateful to the Minister for what he said.

Noble Lords: Order.

Lord Trefgarne: My Lords—

Lord Avebury: My Lords, having been very generous in giving way so far, I shall accept that advice and refrain from doing so from now on, so that we can get on with the debate. I am looking forward to hearing what the noble Lord, Lord Trefgarne, and others have to say. We can pursue all the matters that they wish to raise when we are in Committee.
	This figure of 10 per cent, which was agreed in 1999, is not sacrosanct. In October 2000, there were 695 Members of your Lordships' House in total, compared with 734 today. The noble Lords who are insisting that the 10 per cent figure should be set in stone for all time should, logically, be agitating for the election or appointment of more hereditaries to balance the intake of more life Peers in the mean time. However, if they consider that minor variations in the 10 per cent are permissible within the original agreement, obviously the infinitesimal reductions that will take place as a result of the abolition of the by-elections can equally be accommodated.
	Even if the two noble Lords who cut the deal now say that the Weatherill amendment, as well as the original retention of the 92, was binding in honour on them, what about the rest of us who had nothing to do with that private bargain? To say that we have no choice but to accept the letter of what was carved up without our knowledge or consent is utterly intolerable. That bargain, which was taken over by the then Government, was a breach of the Cook-Maclennan agreement on constitutional reform, as my noble friend Lord Lester pointed out. Let us not talk about honour.
	The practical argument for the by-elections, advanced by the noble Lord, Lord Northbrook, and others, is that they act as a catalyst for the further reform of the House. Catalysts stimulate change and the by-elections have had no effect on the rate of change, which is now dependent on reaching the mirage of a consensus that allows us to embark on second stage reforms.
	The cross-party talks have continued in a desultory fashion since October 2006. In the Statement made by the Secretary of State, Mr Straw, in July 2007, they were expected to lead to a White Paper around the turn of the year, accompanied by draft clauses that would form part of the eventual Bill. That timetable has slipped badly, first, to early in the new year—in the Minister's speech at Second Reading of my noble friend's Bill in November—and then with the Secretary of State "working to gain consensus" on a White Paper which is now due "before the summer Recess".
	Those delays reflect the difficulty of arriving at agreement on any of the issues, even if the committee is composed, as it may be, of people who share the Secretary of State's views and prejudices, as the noble Baroness, Lady Boothroyd, claims in a letter to the Times. Her letter, and that of the noble and learned Lord, Lord Howe, which criticises the notion of a consensus that he says ignores the judgment of those best qualified to consider such questions, reminds us that an agreement reached by a small group behind closed doors may be vehemently opposed when it comes to be presented on the Floor of the House for approval.
	In 1969, Harold Wilson found that to his cost in another place. He had thought that he would get cross-party agreement rubber-stamped by Parliament, but he was forced to abandon it after 21 sitting days on the Floor of another place, as I well remember, having taken a small part in those debates of 39 years ago, as the noble Lord, Lord Hunt, will be aware.
	It would be rash to assume, therefore, that whatever formulae emerge from the cross-party talks will be slavishly copied into manifestos and enacted by whichever party wins the next election. Even if the all or mainly elected solution can be agreed—and my impression is that many noble Lords and perhaps many in the Commons have on reflection backed away from the idea—there would still be difficult problems to solve, such as how to make the transition. If all the existing life Peers are dismissed, would it be by sudden death or, if not, would the proportion of elected Peers be ratcheted up to 80 per cent or 100 per cent over a number of Parliaments? I only mention this as an example of the controversial issues that the all-party committee is having to address and the unlikelihood of unanimous conclusions being reached on all of them.
	Your Lordships have been frequently reminded over the past 97 years of the preamble to the Parliament Act 1911 which states that it was,
	"intended to substitute for the House of Lords as it at present exists a Second Chamber constituted on a popular instead of a hereditary basis, but such substitution cannot be immediately brought into operation".
	It would have been unfortunate if the reforms since then, including the 1949 and 1999 Acts, had been rejected on the basis that nothing should be attempted until Parliament was ready to implement that principle. I suggest that it would be naive today if, banking on the second stage to complete the 1999 proposals, we denied ourselves all opportunities to tidy up some of the loose ends on which there can be no argument whatsoever on merit.
	Of course I agree with my noble friend Lord Steel that this is not the only thing that is wrong with the composition of your Lordships' House as it is presently constituted and that in an ideal world his recommendations, and those of the Select Committee on Public Administration in another place, should be enacted as interim measures. But the very fact that the Select Committee made these proposals for certain reforms falling short of stage two indicates that as far as that committee is concerned, we are perfectly entitled to act incrementally rather than waiting for the whole package to mature. This is also the view of the noble Lord, Lord Norton of Louth, the honourable Member for South Staffordshire, and their colleagues who prefer the gradualist approach in the campaign for an effective second Chamber.
	If, however, your Lordships sit back and wait for what is coming down the track from the secret cross-party talks, you will have only yourselves to blame for not having lifted a finger towards any of the reforms that are necessary to make this House more credible while retaining its unique blend of practical experience in many fields of national life and great expertise in the business of legislation. The Ruritanian customs of hereditary by-elections have long outlived their only useful purpose of persuading the Tory Front Bench not to obstruct the 1999 Bill. Let us take one small pace towards legitimacy by abolishing the by-elections now.
	Moved, That the Bill be now read a second time.—(Lord Avebury.)

Lord Richard: My Lords, I am sure that the noble Lord will have taken actuarial advice on this matter. How long does he think hereditary Peers will last in this House on the basis of his Bill? In other words, how long will it take for them to die out?

Lord Avebury: My Lords, I have not taken actuarial advice, but there are hereditary noble Lords who are a great deal younger than I am so the process would take several decades. But that is not the point; it is not that the hereditaries should continue indefinitely because they may well be swept away by further reforms such as that of my noble friend Lord Steel. This is a purely short-term and interim measure.

Lord Hunt of Kings Heath: My Lords, I gather that the noble Lord, Lord Strathclyde, is 48 years old today. As we all hope and expect him to live a very long life indeed, one can assume that the by-elections would last for 50 or 60 years.

Lord Addington: My Lords, despite the potential problems of longevity, I hope that I might now be allowed to speak. I take some of the blame for this Bill, if blame be due. It was a short conversation in the Prince's Chamber that initially got the thing going. Roughly, the exchange was as follows. My noble friend asked, "Shall we do something about this ridiculous series of by-elections?". I said, "Yeah, go on, then", or words to that effect. My noble friend, needing no encouragement, rapidly went away and did it. We and those on the Labour Benches differ slightly on this. I recall that in the last debate I had prepared anecdotes about rotten boroughs and how four of us have to sit down for a little chat about who we would like to join us to make a group of five, but the Labour Party beats us because only two or perhaps three noble Lords discuss who they want.
	The system produces one or two parliamentary anomalies. My noble friend Lord Glasgow, who spoke in the last debate, is the only Member of Parliament who has been elected with 100 per cent of his electorate not only turning up to vote, but voting for him. Four of us did it. We can jump up and say that this is a great system—I probably will later—but it is an absurdity. It looks silly and it is demeaning to Parliament as a whole. We may produce some decent people from the system who work hard—we hereditaries punch our weight in this House in terms of contribution and effort—but that is about it. We have got to get a move on.
	We hear a great deal about stage 2—stage 1A—which gives us another 25 shots at it, and it is the sort of system where you can have another go. Also, does one Parliament now bind the next? I am sorry, but the people who made this deal are, first, not here, and secondly, not in office. We would not do this with anything else. We need to look at ourselves as we are seen from outside.
	I shall not speak for much longer because before the debate began there was a slim chance that I would have to leave before the end, but that chance is now growing slightly. The essential element here is that, as my noble friend said, it was a deal done because it was convenient at the time. Anybody who wants to build it up to be something more is, in my opinion, trying to rewrite history. Just because someone made a deal in the past, that does not stop us doing something now. Let us get on and be realistic. This Bill provides a way forward so that at least we will look slightly less silly and do not give journalists this very easy strap-line once every two years.

Lord Trefgarne: My Lords, I have listened to the last words of the noble Lord, Lord Addington, with some dismay. He appears to think that undertakings given in honour are binding for perhaps a short period and in the end can be abandoned. What sort of a society is it in which honourable people enter into agreements in good faith and then in a short time, without the circumstances changing, it is suddenly decided that those agreements are of no consequence? Let me remind your Lordships—

Lord Avebury: My Lords, the noble Lord is talking about undertakings given in honour being binding. Surely they are binding in honour only on those who undertook them and not on the rest of your Lordships' House.

Lord Trefgarne: My Lords, I was just about to come to the undertaking and explain, as I see it, how it came to pass and to assert that it is indeed still binding. I ask noble Lords to cast their minds back to 1999. At that time, your Lordships' House was some 1,200 strong, of whom 700 or so were hereditary Peers. The Government, as they were entitled to do, brought forward a measure to remove the hereditary Peers forthwith and without qualification. It became apparent during the consideration of that Bill in your Lordships' House that that proposition was unlikely to find favour with the hereditary Peers as a body, not just the Conservatives, so the Government understandably came to the view that the Bill might well not pass this House because of the votes of the hereditary Peers. Of course they could have forced the Bill through by the Parliament Acts, but for reasons best known to themselves, I suggest properly that they decided that that was not the way to proceed. Discussions took place between the then Leader of the Opposition in your Lordships' House, now my noble friend Lord Salisbury, and the noble and learned Lord the then Lord Chancellor, Lord Irvine of Lairg. An agreement was reached which secured the passage of that Bill through your Lordships' House. The essence of the undertaking that was agreed by the noble and learned Lord and my noble friend was that 92 hereditary Peers would remain in the circumstances which the noble Lord, Lord Avebury, has described.
	That undertaking was time limited to the extent that it would last only until full and complete reform of your Lordships' House had been achieved. There is no need, I suggest, for the noble and learned Lord, Lord Irvine of Lairg, to refresh his memory on the matter because the undertakings were referred to in your Lordships' House, and any noble Lord who wishes to refresh his mind on them can go to the columns of Hansard for that purpose. I am in absolutely no doubt that the undertaking that was given to secure the passage of the 1999 Act, and for no other reason, was to the effect that the 92 hereditary Peers would remain until House of Lords reform was complete, and that as noble Lords sadly passed away they would be replaced in the by-elections that were arranged.

Viscount Astor: My Lords, perhaps I may ask my noble friend a question. He will remember that the undertaking was given by the noble and learned Lord on Privy Council terms and that that was regarded as important by your Lordships' House. I wonder whether he has considered how that will affect that undertaking in the future as opposed to one which was given as a normal part of the debate.

Lord Trefgarne: My Lords, I believe that an undertaking given on behalf of the Government of the day, whoever it may be, to secure the passage of legislation is binding on that Government for so long as they remain in office. Although there have been elections since, the Government have remained in office and therefore the undertaking continues to be binding upon them. Indeed, I do not think we need to press that point because the Government have reiterated the undertaking and their adherence to it much more recently than that.

Lord Avebury: My Lords, the noble Lord said that he was going to address the question I put to him a few minutes ago—whether he was arguing that the undertaking given on the Floor of the House, whether on Privy Council terms or in any other manner, was binding on the whole of your Lordships' House or only on the Government of the day.

Lord Trefgarne: My Lords, I think it is certainly binding on those who gave the undertaking—the Conservative Party and the Labour Party. If the noble Lord feels that the Liberal Democrats were not part of that undertaking and therefore are not bound by it, he is entitled to take that view. But the House, I think, would take the view that the undertaking was binding on all those who are affected by it.

Lord Strabolgi: My Lords, the undertaking was given by the noble and learned Lord, Lord Irvine, on the understanding that the main reform would follow very shortly afterwards, probably in the next Session. That was nine years ago. We are now told that no further reform will happen in this Parliament—that makes it 11 years—and it will not be taken as first business in the next Parliament, so we are getting on to a very long period.

Lord Trefgarne: My Lords, the noble Lord, Lord Strabolgi, is correct: it was generally expected at the time that the Government would bring forward further legislation for the reform of your Lordships' House. That they have not done so is, frankly, a matter for them. It is not for me and not for others; it is a matter for the Government alone. They are not prevented from bringing forward legislation except, apparently, by other legislative priorities—those considered more important.

Lord Gilbert: My Lords, surely it is a basic principle of our constitution that no Parliament can bind a successor Parliament.

Lord Trefgarne: My Lords, I am not entirely sure that that is correct in the context we are discussing. I believe that the undertaking given by the noble and learned Lord the then Lord Chancellor, entered into with my noble friend Lord Salisbury, is binding on the Government for so long as they remain in office. But that is an academic question because the Government much more recently have declared themselves to be bound. They have repeated the undertaking and therefore continue to be bound by it. Whether or not the noble Lord is right, the Government have accepted that they continue to be bound by the undertaking. I regard that as right and satisfactory.
	My principle objection to the Bill is that it rides against the undertaking that was given that the by-elections would continue for so long as we remained essentially an unreformed House. In due course I hope that the Government will bring forward considered legislation for the reform of your Lordships' House. Whether that leads to an appointed House or an elected House is a matter for the Government to decide and propose—I look forward to hearing about it in due course—but, for the moment, we have the House as it is, largely unreformed.
	I turn now to the question of amendments to the Bill. During the consideration of the Bill introduced by the noble Lord, Lord Steel, a novel doctrine—one I reject absolutely—was introduced to the effect that amendments could only be tabled if they fell within the principles of the Bill as defined by the promoter of the Bill. Amendments to the Bill may be made in accordance with the Long Title of the Bill, and the Long Title of this Bill—I shall read it to your Lordships—is to:
	"Amend the House of Lords Act 1999".

Lord Avebury: My Lords, what the noble Lord says is a novel doctrine is nothing of the kind. I beg him, as I did earlier, to discuss these matters with the Clerks because he will find out that he is wrong.

Lord Trefgarne: My Lords, I am greatly obliged to the noble Lord. I have been a Member of your Lordships' House for just as long as him, and perhaps rather longer. I have consulted the Clerks on matters such as these on hundreds of occasions over the past 44 years, I think it is, that I have had the privilege of being a Member of this House, so I dare say that I know as much about it as any noble Lord. Of course I always take the advice of the Clerks, as necessary, but it is only advice and ultimately it is a matter for the House to decide what kinds of amendments can be allowed.

Lord Avebury: My Lords, it is not necessarily a matter only for the House. If the Clerks believe that an amendment is not in order and a noble Lord insists on tabling it, they have occasionally written to the Lord Speaker and, before that, to the Lord Chancellor. The effect of the letter, in the only recent case that has occurred, has been to persuade the noble Lord in question to withdraw the amendment.

Lord Trefgarne: My Lords, I am afraid the noble Lord is not even correct in that. I have on occasions tabled amendments which were against the advice of the Clerks. What actually happens is that the Leader of the House advises the House that the amendment is contrary to the advice of the Clerks, and then puts the matter to the House as to whether it should be allowed. In the end, as I said, it is for the House to decide whether amendments are within the provisions of the Standing Orders or not—and my contention as of now is that any amendment to the 1999 Act would be authorised within the provisions of this Bill, the Long Title of which I have already read to your Lordships. Whatever the noble Lord may think, if he gets a Second Reading of his Bill today, as I dare say he will, and if he then refers the Bill to a Committee of the Whole House, as I dare say he will also, I shall most certainly table large numbers of amendments because it is a very bad Bill.
	The Bill of the noble Lord, Lord Steel, which we were considering previously, also has a number of very serious shortcomings and I took the liberty of tabling a large number of amendments to that—which caused no difficulties with the Clerks, may I add. To be fair, the Bill of the noble Lord, Lord Steel, has one or two small points in it with which I do not necessarily disagree—for example, the exclusion of Peers who may be committed to prison and so on. Those are reasonable provisions which may or may not find the light of the day, but they are certainly worth considering.
	Sadly, the Bill of the noble Lord, Lord Avebury, has no such merit to approve it; it is a thoroughly bad Bill. I hope that he will not proceed to a Second Reading with it but, if he does and it comes to a Committee of your Lordships, I shall seek to amend it in a great many ways which I hope that he and your Lordships will find acceptable.

The Earl of Erroll: My Lords, I, too, offer my congratulations to the noble Lord, Lord Strathclyde, on his birthday. It may help your Lordships if I remark that I share an office with the noble Lord, Lord Freyberg, who is a little bit younger still. He is certainly the youngest hereditary left in the House, although he is not the youngest Member of the House any longer.
	I find this Bill, and another Bill that I am thinking of, proactively pre-emptive and pernicious. They pre-empt the party manifestos. One of the more sensible ideas that the Government have had was to say that, since it is all so difficult, why do we not let the parties put in their manifestos what they would like to do and let the country decide? I thought that we lived in a democracy, so I think that it is rather a good idea to let the country take some view on this. I am sure that it will get teased out at the time of a general election, when we might get a feel for what the electors think about the whole thing and about how the legislators should get to their position. I am being careful what words I use here.
	The trouble with the Bill is that it results eventually in a totally appointed House. I have a great problem with that. I have heard a suggestion that some appointed Peers had hoped that perhaps such a reform would take away pressure for any further reform. That brings me to the real point: what happened at the last stage of reform was that Parliament could not decide as a whole whether it wanted an elected or an appointed House or a mixture of the two. If we had got rid of all the hereditaries, we would effectively have ended up with the results of the Bill: a rump of the appointed Peers and a method of appointing new ones. Parliament clearly did not want that; if it had, it would have agreed to it at the time. To pass this Bill would be to go against the wishes of Parliament as expressly declared the last time we had a proper vote on this subject.
	The purpose of retaining hereditary Peers here was to try to force a proper second stage. The fact that it has been difficult does not matter; it just proves that it is a difficult issue to get around. The noble Lord, Lord Avebury, was elected to stay here with that purpose, which he is now abrogating. I find it difficult that he should have stood for election to this House on the grounds that he wanted to get rid of the hereditaries when the very purpose of his position here is to ensure that we have a properly debated and thought out second stage reform that does not accidentally result in something that we did not want.
	I may as well declare my position for two minutes, although I do not want to extend the debate, which has gone on for an awfully long time already. My own feeling is that we have to end up with an elected House—perhaps not totally elected, but primarily so—because nothing else has any democratic authority. Anything else will end up with Peers being appointed by senior bureaucrats, which will not give the House the authority that it needs in order to retain some power. All residual power will eventually be removed. That would be the structure we bequeathed to our grandchildren—and do we really want unicameral government by the Commons? I do not know; your Lordships may well want that. We all talk about the supremacy of the House of Commons. Maybe we like that.
	I am not going to have a long argument about what we should have; I just do not think that this is the right way to go about it. I am quite sure that this would produce a talking shop. If we look at how Parliament arose and think back to Magna Carta—I know that this is not exactly how Parliament arose, but this is what happened in principle—we see that we had a monarch who executed wars; the nobles said, "If we're paying for it, we want to have some say over it", and we ended up with a legislature trying to control the powers of the Executive.
	Unfortunately, we now have a situation where the Prime Minister, who is head of the Executive, is also the leader of the majority party in the other place. The monarch has also abrogated their powers to the Prime Minister, so suddenly we have the modern manifestation of the monarch sitting in another place. When there is a large majority, as there was under a previous Conservative Government and there has just been under a Labour Government, we find that the Executive can exert unwarranted control over another place. At that point we need a second Chamber with some powers to say to another place, "Hang on, maybe you should think again about these issues". I would be very sad if we bequeathed a system to our grandchildren in which that power disappeared. I am certain that, if we were to pass the Bill, that would be the inevitable result in 20 or more years' time. I hope that we do not vote ourselves into oblivion.

Lord Lea of Crondall: My Lords, it is interesting that so far—and we have been talking for 45 minutes—no one has touched on the merits of removing by-elections. It is odd that in 2008 the axiom of the Bourbons, who learnt nothing and forgot nothing, seems to be the guiding principle of many people on the Benches opposite. Obviously there are other factors that go into what Parliament may now wish to do. I shall mention one that has also not been mentioned: the Labour Party manifesto. That manifesto was pretty ambiguous about what a more representative Chamber would mean, but it was not at all ambiguous that this Parliament would remove the hereditary principle. To put it in very simple terms—as would be used in Lancashire—this is the best offer that the hereditary Members are ever going to get.

Lord Strathclyde: No, my Lords. Very soon there will be a White Paper for a wholly elected senate. Some of us would quite like to stand for that.

Lord Lea of Crondall: My Lords, that is all very well for the noble Lord, Lord Strathclyde, on his secret committee with the noble Lords, Lord McNally and Lord Hunt of Kings Heath, and Jack Straw. In the interests of democracy and the democratic revolution, the Committee for Public Safety is going to produce in secret the same stitch-up, the same problem of honour—

Lord Hunt of Kings Heath: My Lords, in thanking my noble friend for his kind remarks, I point out to him that the White Paper will be subject to full consultation, on which it is hoped that the political parties will then be informed, leading to manifesto pledges that will then lead to legislation—soon after the next election, we hope.

Lord Lea of Crondall: My Lords, only this week, on Monday, in a reply to Sir Patrick Cormack in the Commons, Jack Straw said that it was not in the interests of public inquiry that there should be any public scrutiny of the work of the Joint Committee by way of publishing its minutes. That is precisely the sort of deal, if you like, that is a total affront to democracy and the total antithesis of it.

Lord Trefgarne: My Lords, the noble Lord, Lord Lea, is a distinguished member of the Labour Party, about which he is complaining so vigorously. Why does he not make these representations to his own Chief Whip and to Mr Straw himself?

Lord Lea of Crondall: My Lords, I do not know why the noble Lord, Lord Trefgarne, would not conclude that I am already doing that as well. Of course I am. I thank the noble Lord for saying that I am a man of honour. The question needs to be addressed by the noble Lord, Lord Trefgarne, the noble Earl, Lord Strathclyde, and others who take the view that he does. The fallacy is that he is removing a scenario that is illegitimate. If the White Paper—

The Earl of Erroll: My Lords, I took umbrage at the same thing as the noble Lord, Lord Strathclyde, when the noble Lord, Lord Lea, impugned my honour by suggesting that it was in my personal interests to vote for this because I would stay here. I do not see myself in this House for political advantage—unlike, perhaps, some others. The noble Lord is suggesting that hereditary Peers all think the same way. I am here in order to see a better Parliament come out of it, not in order to have my own seat in the Lords kept warm. I dislike any suggestion that we have the same motives as some other people.

Lord Lea of Crondall: My Lords, that point is not apropos of anything that I said.

The Earl of Erroll: My Lords, it was exactly what you said earlier. You suggested that it was the best deal that the hereditary Peers were going to get, which suggests that I am interested only in my longevity here, not in leaving a better Parliament behind me.

Lord Bach: My Lords, again, I play the spoilsport. I have to remind noble Lords of the Companion, which says:
	"A member of the House who is speaking may be interrupted with a brief question for clarification".
	I repeat,
	"a brief question for clarification".
	It continues:
	"Giving way accords with the traditions and customary courtesy of the House. It is, however, recognised that a member may justifiably refuse to give way, for instance, in the middle of an argument, or to repeated interruption, or in time-limited proceedings when time is short. Lengthy or frequent interventions should not be made, even with the consent of the member speaking".
	I am conscious that some extremely senior Members of this House are present and taking part in this debate. Everyone wants the debate to flow and these are important matters, but it is worth all noble Lords remembering that this debate—of all debates—should be in accordance with the conventions of the House.

Lord Lea of Crondall: My Lords, I am grateful to my noble friend for that clarification.
	The problem with the doctrine of this Bill contradicting what may or may not be on the Hansard record as having been agreed between the noble Marquess, Lord Salisbury, and the noble and learned Lord, Lord Irvine, is that it presupposes that they defined the scenario that would constitute stage 2. I can give noble Lords a perfectly plausible scenario, which I think is the most likely as we stand here today. There will be no big bang or finality and, until one happens, the noble Earl, Lord Strathclyde, the noble Lord, Lord Trefgarne, and others—not for any Machiavellian reason, but because this is their understanding—have, like Mr Gromyko, a veto. Any time they say "Nyet" that is it. There is no discussion in this Parliament at all. I put it to the noble Lord that that is an impossible situation. Let us look at the merits of the matter. I congratulate the noble Earl, Lord Strathclyde, on being 48 today.

Noble Lords: He is not an Earl!

Lord Lea of Crondall: My Lords, I am sorry, I promoted him. I am not used to this hereditary business. In 50 years' time, in 2058, he will be 98 and he may pop off. If we have not finished stage 2 by then, his progeny will be candidates—

A noble Lord: No!

Lord Lea of Crondall: My Lords, they would be potential candidates. On the Gromyko principle, that would be that. We could not even discuss it, whereas I would be quite surprised if my noble friend Lord Hunt of Kings Heath would give accord to the assertion made five minutes ago that, if there were an incremental approach in the White Paper, if the Labour Party manifesto on this point were implemented and if finality had not been reached on every point by a big bang, the noble Lord, Lord Trefgarne, would be able to say, like Mr Gromyko, "Nyet". It is patently obvious that that is absurd.
	I now turn to the argument that these by-elections are a hostage for a stage 2 deal. On the political merits of the matter, is this a wise approach? Is it not about time that, instead of fiddling around in secret, we had a bit of straightforwardness and transparency about how people think that these matters will go forward? I have heard nobody say that, other than in interpreting a deal, there is any merit in continuing the by-elections.
	This year, we celebrate 50 years of the life peerage. The Lord Speaker, if I may say with great respect, is doing a fine job of putting on events to mark the 50th anniversary and the life peerage system has been a great success. People out there in the country looking at it would recognise that. Now is certainly the time to do the minimum and meet the commitment to remove the hereditary principle. I commend the Bill to the House.

Viscount Astor: My Lords, we have heard some interesting contributions. The first was from the noble Lord, Lord Avebury, who showed how easy it is to rewrite history, even very recent history, and come up with an entirely different view on what many of us thought had happened. I would like to introduce a new rule when it comes to discussions on the deal between the noble and learned Lord and the noble Marquess. As far as I can see, those who were furthest away from the negotiations have the strongest view about what happened, and it seems to be directly opposite to the view of those who were actually there, but never mind. What is clear—this was confirmed by my noble friends Lord Salisbury and Lord Campbell of Alloway, who asked me to add his name to this—is that they both expected reform would come sooner rather than later. That is why the deal was agreed. We all expected that, and it is a surprise that we have not had any stage two reform.
	The noble Lord, Lord Hunt, said that the Government would produce a White Paper. Rather surprisingly, that means that I have a certain amount of sympathy for the contribution of the noble Lord, Lord Lea. A White Paper usually outlines government proposals, and a Green Paper allows discussion of a subject. Equally, we had a letter from the Leader of the House saying that the Minister,
	"would ... welcome the opportunity to engage with",
	cross-party discussions,
	"working towards proposals for an eighty per cent elected or fully elected House of Lords".
	It seems to me that the Government have already decided to accept what another place has put forward. It does not inspire confidence that there will be any open discussion about any other type of Chamber, whether appointed or elected in a different way. The letter from the Leader of the House seems to rule out that possibility. Will the Minister comment on that?
	There has been some comment on the cross-party group, and I see that the noble Lord, Lord Faulkner of Worcester, is extremely concerned that the minutes of the meetings are not made public. Indeed, the Minister has rejected two applications under the Freedom of Information Act 2000. Why is that? If we are to have an open debate from all parties, why should that happen? I ask that particularly in the light of the letter in today's Times from the Convenor of the Cross-Bench Peers, the noble Baroness, Lady D'Souza, who says that as a,
	"member of the cross-party group on Lords Reform, chaired by the Lord Chancellor, I feel it important to point out that I have not at any point supported a wholly or even 80 per cent elected House".
	So it seems to me that some people do not accept the premise on which the Government are proceeding. Will the Minister comment on that?
	I have a further question for the Minister. The Government have always said that they would not use the Parliament Act to push through any reform. Can the Minister confirm that that is that still the case?
	I return to the Bill of the noble Lord, Lord Avebury. Part of the deal was that there would be an electoral system that would allow the hereditaries to remain but stage two reform would still go ahead. It is not the fault of those of us who are hereditary Peers that stage two has not happened. For various reasons, the Government have been unable to produce consensus. Indeed, this House and another place do not agree on how reform should proceed. One can argue for an appointed House or an elected House. Two entirely different Houses would result from the two options.
	The Bill is wrong for several reasons. First, we are waiting for the Government to say what their proposals are and, as we heard, they are going to consult. Therefore, the Bill pre-empts that process to some degree. Secondly, the only way in which we shall achieve substantial reform is for members of both major parties to agree a stance among themselves—the parties do not have to agree with each other—and put it in their manifesto. One party will win the general election, and that will probably be the moment when reform happens. That seems to me the most sensible process. The country will be able to decide the right way forward.
	I do not think that the Bill is right. I will support the amendments tabled by my noble friend Lord Trefgarne. I agree with him that the noble Lord, Lord Steel, put forward a rather strange doctrine that seemed to say, "You can't put down amendments to my Bill if I don't think they should be put down".
	Finally, views differ around the House on whether we should have an appointed or an elected second Chamber. My views change sometimes, usually depending on whom I have last heard speak. So I hope that noble Lords who are wavering after hearing my speech will not suddenly stop supporting an appointed second Chamber and switch rapidly to support a fully elected one.

Lord Desai: My Lords, I commiserate with the noble Lord, Lord Strathclyde. It is bad enough to have to spend your birthday at work but being made a member of the Committee of Public Safety and compared with Gromyko must be special presents that he probably did not expect. I wish him a long life. I see that he shares a birthday with Bruce Forsyth, and that cannot be a bad sign.
	I have always been for a wholly elected House. Although the noble Lord, Lord Avebury, called his approach gradualist, it is not—we have been very gradualist about House of Lords reform as it is—it is incremental. I do not like incrementalism because, as I said in Committee on the Bill introduced by the noble Lord, Lord Steel, it is likely that a Bill like this, once passed, will make people think, "Oh, we've reformed the House of Lords. What is there left to be reformed"? I want the big bang. I make no apologies for that.
	I very much follow the arguments made by the noble Earl, Lord Erroll. I want an elected House because that would be the only guarantee of a binding restraint on the Executive. As we are right now, talented and marvellous and handsome as we all are, we always hold back and say, "Another place has been elected, therefore it must have primacy". As long as that continues, the Executive here will misbehave. We know that Executives of all parties misbehave and that only a strong legislature can keep them under control.
	Having said that, the Bill before us is curious. It does not get rid of the hereditary peerage at one fell stroke, as it were, as the Bill introduced by the noble Lord, Lord Steel, was trying to do. It does not do very much except attempt a slow and steady erosion of the number of hereditary Peers. Therefore, I do not quite know in what sense it would reform the House. I know that people do not like the by-election clause. For historical reasons, 75 Peers—10 per cent of the 750 hereditary Peers—are elected from party constituencies, and 15 elected by all of us. If people do not like small electorates, let us assume that every vacancy could be filled by all of us. That is perfectly doable, and it would remove small constituencies in by-elections and give us all a stake in which hereditary Peer got in next. If the smallness of the electorate bothers people, it can be amended.
	If people do not want hereditary Peers here at all, they will have to remove the entire Section 2 of the House of Lords Act 1999, and not just reform it. Any parliament can change—

Lord Lea of Crondall: My Lords, I am trying to listen as carefully as I can to the proposition that he has just put—that there could be a different system of election. Is he suggesting that all the Members of the House of Lords could decide who a Labour-whipped Member would be, or, if it was to be on an open list, that they could be all Labour or all Conservative and so on? Has he thought through how exactly that system would work, given that—he did not quite put it this way—under the absurdity of the present system we are down to, I believe, two or one electors in the Labour Party for an incoming Member?

Lord Desai: My Lords, I am a generous, non-partisan sort of person. I am happy to have anybody run for a vacancy because, in a sense, what distinguishes us is not so much that we are in different parties but that we come here on different grounds depending on whether we are hereditaries or life Peers. Therefore, all hereditaries should be able to compete in a by-election. Nobody is asking me to reform the House or the world, sadly; I am just suggesting ways in which one could improve the current system if the narrowness of the constituencies is the objection.
	If the objection is the very presence of hereditary Peers, as I said, the entire Section 2 would have to be removed. Although one Parliament can reverse what another has done, constitutional change can be made only with consensus. It cannot be made incrementally. In that I agree with noble Lords opposite, not because some fundamental understanding may have been arrived at between two privy counsellors. If you go through the history of this country, you will find that all sorts of betrayals and reneging have been done on Privy Council promises. I shall not go into that murky area.
	We have to agree consensually that the reform is necessary. We have to wait for the White Paper. I hope that a House of Commons decision to have either 80 or 100 per cent-elected House will be implemented as soon as possible by whichever party has to do it after the next election.

Lord Wallace of Saltaire: My Lords, before we start the wind-up speeches, may I ask for a ruling on appropriate intervention? The Government Whip read out paragraph 4.37 of the Companion to the Standing Orders, stating that lengthy or frequent interventions should not be made even with the consent of the Member speaking. This is not Committee stage; we are having a Second Reading debate. Behaviour that would be appropriate in Committee seems, in a House that polices itself and therefore has to impose self-restraint, out of order today. I ask for a ruling on this for future purposes.

Baroness Ashton of Upholland: My Lords, I hesitate to rule on anything. However, the Companion makes it clear that, as one listens to a Second Reading speech, it is perfectly in order to ask a question on a point of clarification if one is not entirely sure what a noble Lord has meant. That is entirely different from intervening in order to make a short speech, to contradict or, as sometimes happens—not today—because one has not put one's name down to speak in the debate. In my view, it is inappropriate to do any of the latter, and that is certainly where the Companion stands.
	We are a different House. We pride ourselves on listening, even when severely provoked by noble Lords. It is one of the joys of this House to be provoked on occasion intellectually and sometimes even emotionally. We should relish that, but we should also hear each other out.

Lord Strathclyde: My Lords, I entirely support the noble Baroness the Leader of the House in what she has said. I thought that the timing, and indeed the wisdom, of the noble Lord, Lord Bach, on this occasion was entirely appropriate. He read from the Companion before we started to get out of order. That was extremely helpful and, as a result, we have had a very good debate.

Lord McNally: My Lords, I now expect to be heard in total silence and with a degree of respect. First, I associate myself with the congratulations to the noble Lord, Lord Strathclyde, on his 48th birthday. He beats my birthday by two days but, alas, I beat his by 17 years. Working with the noble Lord keeps me young. Apropos the last intervention, I think that the problem lies with these early morning sittings. Your Lordships come in well rested and far too feisty.
	I saw the list of attendees that was sent round. The two most assiduous attendees from the Liberal Democrat Benches were my noble friends Lord Addington and Lord Falkland, two of our hereditaries. It also has to be said that, of the seven speakers today, five were hereditaries, and of course the noble Lords, Lord Lea and Lord Desai, both belong to the aristocracy of Labour, so we have had a good hearing.
	My noble friend Lord Avebury got it right when he said that the present system was "bizarre, irrational and undemocratic" but that is exactly what the deal was. It gives a lesson that surely we should have learnt some time in the past 500 years: always beware deals with Cecils. The family has some record and some skill on these matters, which a poor Scottish advocate may not have had

Noble Lords: Oh!

Lord McNally: My Lords, certainly the noble Marquess, Lord Salisbury, left Labour with a tar-baby. What has not been said today is that one reason for the deal—a view shared by all Benches—was that, unless there was some kind of hostage to the future, the then Prime Minister, Mr Tony Blair, might have liked to continue with a House of patronage, as it provided him with all kinds of ways of dealing with, and stocking, this House. That has been readily proved in the delay in bringing forward reform. I remember talking to our Leader at that time. I was furious about the deal because it was a betrayal of a previous one—the Cook-Maclennan agreement—between Labour and the Liberal Democrats before the 1997 election. I remember saying to my noble friend Lord Rodgers, "Never mind. We'll get full reform in two or three years". My noble friend, being the wise old owl that he was, said, "I don't think we'll see another Bill for reform for another 10 years at least". I was shocked, but how right he was.
	Like the noble Lord, Lord Desai, I am in favour of full reform, but I voice one concern. Something like more than half the Members of this House were created Peers during the Blair years. Although a few of them were younger, most entered the House in their 50s and 60s. If that situation remains untouched, it will not be long before this House has nearly 1,000 Members, with a large proportion of them being over 70, popping in for their tick and drawing their expenses. I say to your Lordships that, when that happens, the high regard in which this House is held by the general public will begin to fade. Therefore, I worry that, if reform is left indefinitely and these anomalies are left unresolved, there will be a problem with the reputation of this House.
	As to the way forward, if you put the noble Lord, Lord Lea, and me in a room—in the past, we have often been in a room trying to reach agreement, and it has not been easy and has rarely been brief—we will never agree on Lords reform. I disagreed with the noble Lord, Lord Desai, when he said that the only way to get constitutional reform was by consensus. We have never got constitutional reform by consensus; we have achieved it by threatening revolution or by threatening to create 1,000 Peers. We would have got full reform in 1998 if the Labour Party had not bottled it when it had the full authority of a massive majority. However, we are where we are and the only way that we will get Lords reform is, as suggested by the noble Viscount, Lord Astor, and the noble Earl, Lord Erroll, for the major parties to put in their next manifesto a clear determination to reform this House. I shall answer the noble Viscount, Lord Astor: I believe that with such a clear determination, endorsed by the electorate, the Government of the day would be entitled to use the Parliament Act because without it this House would be left with a veto on constitutional reform, which is unacceptable in the light of the opinion of another place and the endorsement of a general election.
	I am grateful to my noble friend Lord Avebury for raising this issue. It should spur us on to reform, because unless we reform we will find that the high reputation that this House enjoys begins to fade as the public become aware of the absurdities of the present situation.

Lord Strathclyde: My Lords, I thank noble Lords who have been kind and generous in their birthday wishes, much to my embarrassment. I was hoping to wish the noble Lord, Lord McNally, a very happy birthday two days ago. Sadly, I know that he has not been well, but regardless of what was wrong with him, he is all right now and on very good form.
	The whole House will know that Lords reform is one of my favourite subjects. I always enjoy speaking on it. This has been a vintage debate with the noble Lord, Lord Lea, accusing me of being like Gromyko, saying "nyet", and promoting me to an earl, which I take in very good spirit. If the peerage and membership of this House are ever separated, there is no reason why earls should not return—not to this House, but as part of the honours system. The days of the earls are not yet over, I suspect. As I said earlier, I am grateful to the noble Lord, Lord Bach, for reminding us of the proper procedures during Second Reading.
	When I thought about speaking in this debate I could not help but reflect on groundhog day when looking at the list of speakers. However, I looked up the last time that we debated this Bill and to my amazement I discovered that I had not spoken on it; I just thought that I had. My noble friend Lord De Mauley in fact wound up on behalf of the Opposition on that occasion, but he has had a busy week and so I thought I would take the task off him. I was also sorry that the noble Lord, Lord Richard, did not speak on this occasion, but I am delighted that he is here because he and I agree on a great deal on this subject, and have done for some time.
	I was baffled why the noble Lord, Lord Avebury, reintroduced this Bill which had had a Second Reading less than a year ago. I was also puzzled because I could see that nothing had changed sufficiently to bring this Bill forward again for another go. The noble Lord, Lord Addington, answered that question and said that it was all his fault because of a brief conversation that they had had in the Prince's Chamber. All I can say to the noble Lord, Lord Avebury, is beware of brief conversations in the Prince's Chamber from now on.
	Not a great deal has changed as regards the background to this Bill, but much has changed otherwise. The Steel Bill has been reintroduced in this Chamber and one of the great differences between the two Bills—the House knows that I have suggested one or two improvements to the Steel Bill—is that at least the Steel Bill tries to tackle some of the more fundamental issues surrounding a wholly appointed House. That is one of the merits of the Steel Bill; one of the demerits of this Bill is that it does absolutely nothing else.
	Secondly, the Government have said that there will be a White Paper over the course of the next few months, so we shall have plenty of time to debate and to discuss the wider issues of reform and the timetable. We now know that it is extremely unlikely that a reform package will be introduced prior to the general election, so we have plenty of time to get it right and to search for that consensus. Whether we shall succeed, I do not have the faintest idea. However, it is right that there should be a search for consensus and that as many people as possible should be included in the debate. That is why I do not regard myself as being part of secret talks. I have no difficulty in this being an open process. I have suggested that there should be parallel committees. I have no difficulty with others seeing the papers, the minutes, the timetable or anything else.

Lord Lea of Crondall: My Lords, I am sorry I promoted the noble Lord, Lord Strathclyde. He says that he has no difficulty with publication of the minutes of the Joint Committee. I doubt whether the noble Lord, Lord McNally, who will correct me if I am wrong, has difficulty with open government and I doubt whether the noble Baroness, Lady D'Souza, has any difficulty. Without embarrassing anyone on my own Front Bench by asking them inappropriately direct questions, I am pleased to be able to tot up a majority on the Joint Committee for publication of the minutes, so that there is no alarmist talk about what they are up to or about stitching things up in secret. Is the implication of the noble Lord's remark that he will vote on the Joint Committee for publication of the minutes?

Lord Strathclyde: My Lords, votes were certainly taken, but I was going to say that it is not my committee: it is the Government's committee. They have invited some of us to come along and discuss these issues with them, and have taken the view not to share the papers in quite the same way that I think would be all right. I have no difficulty with that because there is nothing hugely secretive about these papers. There is nothing very surprising; they go through an analysis of what an elected House might look like. I know that the noble Lord, Lord Lea, and others do not approve of that, but they will have plenty of time to look at that in the near future.
	Thirdly, I will not follow other noble Lords in a huge analysis of the Irvine declaration. Those of us who were there know what it was about; the Minister has repeated it and he is right to do so. If there had not been provision for the by-elections, what would have been the point of the hereditary Peers accepting that there should only be 92 hereditary Peers—although they would be life Peers—staying behind? It was because of the promise of stage 2 that they agreed to go and the Bill was passed, actually surprisingly quickly, as was the rest of the Government's legislation.

Lord Richard: My Lords, surely the main incentive for the hereditary Peers when they were all about to be abolished was that 92 of them could continue to sit in this House. Surely that was the main consideration, not whether they could pass it on to their sons.

Lord Strathclyde: My Lords, there would have been no incentive to go on to stage 2. Some were unsure whether Mr Blair and his Government meant it when they said—not, I might say, the noble Lord, Lord Richard—that they wanted a full democratic House. Some of the advisers around the then Prime Minister have confirmed that they never had any intention of going forward to an elected House. So when the hereditary Peers left as they did, it was on the understanding that stage 2 would be brought in and the by-elections would continue until that took place and be, in part, an incentive for it to happen. One reason we have this White Paper is that the by-elections are still in place. In that context, the noble Lord, Lord Rodgers of Quarry Bank, was indeed one of those wise people who foresaw that stage 2 might not happen for some time.
	What is all this about? What is getting at the noble Lord, Lord Avebury? Why has he come forward with this Bill? I listened to his speech and am still as baffled as I was at the beginning. The noble Lord, Lord Addington, is angry. He is very steamed up about the outrage of a failure to bring forward stage 2. He is right to be, but he must concentrate his ire on the Government, not on us. We are the incentive that will provide the force for change that this Government need.
	Since 1999, the edge between hereditary Peers and life Peers has become very fuzzy, but the noble Lord, Lord Avebury, is in fact a hereditary Peer. It may shock the House to know that he was elected to this House by his fellow Peers. I find it inexplicable how he, who stands up for human rights, freedom, liberty, justice and democracy on so many issues around the world, can take advantage of a system and immediately pull up the ladder to ensure that nobody else can be like him. That is what is so shallow and disgraceful in the manner in which he has brought forward this legislation. That is his first incentive, I suspect.
	The second incentive is entirely partisan. Nearly half the former hereditary Peers are Conservatives, so perhaps his plan is to ensure that the Conservative Party cannot elect new hereditary Peers and keep its numbers up. That is a perfectly valid political aim, but why does he not say so? Why does he not come forward and tell the House exactly what he is after?
	The third possibility is that he does not want any further change at all. He prayed in aid my noble friend Lord Norton and my honourable friend Patrick Cormack, the Member of Parliament for South Staffordshire. Neither of them is very keen on further changes to this House, so perhaps the noble Lord is with them. I do not know, but why does he not tell us what his incentive is for this change?
	When my noble friend Lord De Mauley spoke last time, he said something so good I could have said it myself, so I shall read it out:
	"This is the wrong Bill at the wrong time, dropped into a House that is functioning well and targeted at a rare category of new entrants untainted by the accusation of impropriety over their means of entry to your Lordships' House, a category that few outside the House, against the background of cash or loans for peerages, see as the most urgent target for reform".—[Official Report, 18/5/07; col. 438.]
	I agree. If the noble Lord, Lord Avebury, insists on taking this forward to Committee, I shall certainly be one of those who seeks to amend it.

Lord Hunt of Kings Heath: My Lords, I congratulate the noble Lord, Lord Avebury, on introducing the Bill. It is four weeks since we last discussed reform of your Lordships' House and I have been suffering withdrawal symptoms. It is good to come again to debate this matter. I also congratulate him on his skill in technical drafting because my officials have not been able to find anything wrong with the Bill. I am sure that will not prevent noble Lords moving amendments when we come to Committee.
	The formal position of the Government is, of course, that we do not oppose Private Members' Bills in your Lordships House at Second Reading, and we will not seek to do so on this occasion. However, I should say to the noble Lord that the Government would not want to see his Bill on the statute book. I shall repeat quite plainly and clearly that we are clear that it would breach the commitments made by my noble and learned friend Lord Irvine during the passage of the House of Lords Act 1999. We wish to see the removal of the hereditary Peers as part of the comprehensive reform package that will be proposed for your Lordships' House. My noble and learned friend has been quoted by many noble Lords in this fascinating debate. Indeed, my noble friend Lord Lea posed the question of what my noble and learned friend made of the pledge that he gave. Only God and my noble and learned friend know what was meant by the pledge and, so far, my noble and learned friend is not telling—I suspect that he would be very wise to continue not to tell.
	It is worth noting what my noble and learned friend said in 1999. He said that the Weatherill amendment,
	"reflects a compromise negotiated between Privy Councillors on Privy Council terms and binding in honour on all those who have come to give it their assent".
	He also said that,
	"the 10 per cent. will go only when stage two has taken place. So it is a guarantee that it will take place".—[Official Report, 30/3/99; col. 207.]
	I know my noble friend Lord Desai thought that talking about privy counsellors and Privy Council terms was rather a murky area. As the noble Baroness the Lord President of the Council is sitting beside me, I refer such murkiness to her. The fact is that those of us who were in your Lordships' House—I was the government Whip on the Bill—were quite clear what the Irvine pledge meant. On 11 May 1999, my noble and learned friend said:
	"I respond to the noble Lord, Lord Weatherill, by saying quite unequivocally to the House that that figure of 90 will be honoured by the Government throughout the period of the transitional House".—[Official Report, 11/5/99; col. 1094.]
	It was made clear that the basis of the composition of your Lordships' House remains as it was when my noble and learned friend made that commitment. The Government said that while this transitional House exists, we will honour the figure of 90 hereditary Peers. We continue to do so.
	It is worth pointing out to the House that in explaining what the transitional House meant, my noble and learned friend said:
	"Time and again we have emphasised that the Bill itself is a transitional measure providing for a transitional House".—[Official Report, 26/10/99; col. 169.]
	He also said:
	"The transitional House which will be created as a result of the Bill will be exactly that: transitional and not permanent. The Government are absolutely committed to moving to stage two in the reform process ... I make it absolutely plain that stage two reform will take place and when it does the hereditary Peers who remain ... will cease to be Members of this House".—[Official Report, 11/5/99; col. 1092.]
	It is of course true that the current transitional House has existed for longer than was originally envisaged. The noble and learned Lord, Lord Irvine, acknowledged the theoretical possibility of that in 1999. The noble Lord, Lord McNally, said that we should beware of negotiating with the Cecils, but I do not agree. The agreement in 1999 was a sensible and pragmatic way of seeing through reform of your Lordships' House. I pray in aid the then noble Viscount, Lord Cranborne—now the noble Marquess, Lord Salisbury. Referring to by-elections, to which he said that he attached great importance, he said in 1999:
	"If we subscribe—as I certainly do—to the theory that the principal reason for the existence of the 92 hereditary Peers in the transitional Chamber is that it is a continuing incentive for the government of the day to progress to a full stage two reform, then evidently it is of interest to maintain that full number so long as a full stage two reform has not taken place".—[Official Report, 25/5/99; col. 899.]
	I agree with the noble Lord, Lord Addington, that the by-election system is hard to defend, but it is the guarantor of a fundamental reform of your Lordships' House, which is what we are engaged in. Noble Lords seem to find objectionable the prospect of a cross-party group taking forward proposals based on the votes of the Commons, which clearly voted for the two options of an 80 per cent or 100 per cent elected House. That will lead to the production in a few months of a White Paper, then to full consultation and debate, then, one hopes, to consistency among the political parties in their manifestos and, then—again, one hopes—as soon as possible after that to legislation for fundamental reform. That seems to be neither an objectionable nor a secret process, but a sensible way to go forward on the basis of the votes of the Commons, which has primacy, allowing for full debate. Surely that is the way forward.

Viscount Astor: My Lords, the Minister spoke about a process of agreement and a manifesto, and said that we would go forward. I presume that he meant a manifesto and then going forward after a general election. Am I correct?

Lord Hunt of Kings Heath: Absolutely, my Lords. I know that the noble Viscount asked earlier whether it was really a White Paper or a Green Paper. The answer must be that we will of course produce a White Paper; it will be a government White Paper, but helped and informed by the discussions in the cross-party group. Inevitably, it will have some green tinges as well. I suspect that we are not going to agree on matters to do with a voting system to be adopted, given the views of different parties. There may be other aspects on which there will not be unanimity of view, which can be reflected in the White Paper. What will be important is the commitment among the principal parties to fundamental reform based on the votes of the primary Chamber, the House of Commons.
	It is in that context, therefore, that, while I fully accept that the Bill of the noble Lord, Lord Avebury, for whom I have great admiration, is put forward with the best intent, I do not believe that it could be considered to be in accord with the Irvine pledge, to which this Government remain committed. It is not part of fundamental reform, which we believe is the way forward. Talks within the cross-party groups have been enormously constructive, and I am confident that we can see fundamental reform of your Lordships' House in the next few years. That is surely the way in which we need to go.

Lord Lea of Crondall: My Lords, is my noble friend aware that some of us do not believe that the doctrine of primacy is as he states? With general legislation, whether it is to nationalise a bank or whatever, that must of course be true. However, while in a banana republic you may not need a two-thirds majority and both Houses involved in whether one or the other is going to be abolished, is it not the case that, on a constitutional question, simply pointing to a slim vote in the Commons does not decide the matter?

Lord Hunt of Kings Heath: My Lords, Parliament will decide this matter when legislation is brought before it. I find it interesting that those many Members of your Lordships' House who are opposed to an elected element always say that one of their great fears in having an elected second Chamber is that it will challenge the primacy of the Commons. Here we have a clear case in which, after the last White Paper, which again was informed by the cross-party discussions, the Commons reached a very clear view that it would support an 80 per cent or a 100 per cent elected House. We are taking forward the White Paper on that basis and we have said that we have hoped that it would then be reflected in political parties' manifestos leading up to the general election. On that basis, I should have thought there would be clear authority for a future Government after that election to put proposals before Parliament for reform of your Lordships' House. In that event, the whole parliamentary process will take its course.

Lord Avebury: My Lords, first, I echo the good wishes expressed to the noble Lord, Lord Strathclyde, on the occasion of his birthday, which I was unaware of when I spoke at the beginning of the debate. I am very happy to do that now and to see him celebrating it in such an appropriate manner. I also thank him for the kind remarks that he addressed to me, particularly his epithets of being shallow and disgraceful, which I am sure will do me a great deal of good with my party. I also appreciated the remarks that he made about the Bill itself.
	The noble Lord, Lord Lea of Crondall, said that no one in this debate had defended the by-elections. The noble Lord, Lord Strathclyde, did not attempt to defend them and neither did the Minister, who said that the by-election system was very hard to defend but that it was the guarantee of fundamental reform of your Lordships' House. That was precisely what I said it was not. When people agreed to the by-election system, they may have thought that it was going to lead to fundamental reform in the near future. The fact that it did not shows that it was ineffective—and still is.
	Nothing in the Bill affects one way or the other the process that leads to fundamental reform, which was outlined just now by the Minister. Whether or not the Bill goes through your Lordships' House, we will have a White Paper in the near future and the process will certainly be reflected in the party manifestos in the next election. As I understand it, every party has agreed to fundamental reform, even if not all the details can be ironed out in the cross-party committee. Party manifestos from the three main parties will include a commitment to enactment of fundamental reform, whether or not the details are identical. That Bill, which will then be introduced in the next Parliament, will have a legitimacy that will probably make use of the Parliament Act unnecessary, because everyone will realise that the process has been agreed universally and that only the final settlement of the details in the election remained to be accomplished before its implementation.
	Nothing in the Bill changes that. All that we are doing, if noble Lords are correct, is saying that in the meanwhile—in the three, four or five years before a Bill is introduced in the next Parliament to implement whatever fundamental reforms are agreed—we shall not have any by-elections. I have not heard anyone say a word against that idea. My noble friend Lord Addington characterised the by-elections as silly and demeaning to Parliament, and no one contradicted those adjectives. I hope, without going into any further detail at this stage, that we shall have a productive and short Committee stage and that my expectations about the nature of the amendments that will be tabled will be realised.
	On Question, Bill read a second time, and committed to a Committee of the Whole House.

House adjourned at 1.16 pm.